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Buying a car: A Confused.com guide

A 2007 mioni Cooper S in redBuying a car can be a confusing business, particularly if it’s your first time doing so.

With people trying to sell you things every step of the journey, it’s important to know exactly what you’re doing – something that’s often easier said than done.

To help you out, we decided to put together our very own step-by-step guide to making that big purchase, crammed full of all the little things you need to remember from budgeting to choosing the right car insurance.

Step 1: Budgeting

It might sound obvious, but budgeting for your car is probably the most important step of the lot.

  • The maths bit - Take a lot of time thinking about exactly how much you can afford to spend on a car after you’ve taken tax, your mortgage or rent, bills, and any other expenses you might realistically have into account
  • Be sensible – Always allow more left over than you think you’ll need. While you might tell yourself that you’ve got the willpower not to go out all month, the chances are that you will
  • Think seriously about running costs – How much are you going to be able to afford on top in insurance, fuel bills and servicing? Bear in mind that the cost of replacing your car is likely to play a major part when you comne to buy car insurance, for a start
  • Used or Brand New? While we’d all love to buy a shimmering car fresh from the production line, you’re likely to save an awful lot of money by going for a used car. The biggest depreciation in value of a car will come in its first year, so even buying a one-year old model will save you a bundle (plus you’ll get two years warranty left on the car.)

(TIP: Did you know that Confused.com offers car depreciation insurance, otherwise known as GAP insurance? If your car is stolen or written off, your motor insurance will cover the value of your car on theincident date - not what the car was worth at the start of your policy.

Car depreciation insurance pays the difference on top of your motor insurer's settlement so you're not left out of pocket.)

  • Are you trading in an old car? If so, a number of dealers and other websites offer free, immediate online valuations which can roughly tell you the amount you should be aiming to receive for your existing motor.

(TIP:This is also a good way of checking up a price a dealer might have given you on a used car.)

Financing your purchase 

Not all of us have major savings stored up, and you may well need a loan to finance your purchase. But beware – while car dealers often attempt to seduce you with 0% deals and repayment holidays, there’s every chance that you’ll be able to find a better loan outside of the showroom. Here’s a full rundown of the major options available to you:

Hire Purchase 

This is what you’ll likely get if you get your car finance in the showroom. You put down a deposit and the dealer will let you take the car away that day – followed by a fixed period of repayments to a separate finance company. The problem with this method is that you don’t actually own the product until you make the final payment - meaning you won’t be able to sell on or modify the car until you have cleared your debt and could face hefty charges or even have the vehicle repossessed if you fail to keep up with repayments.

Sometimes there may be a fee at the end of the period of instalments to allow you to own the vehicle outright, so check this with your lender.

Conditional Purchase

This is similar to Hire Purchase, with the major difference being that you won’t be charged a fee at the end.

Personal Contract Purchase

A decent bet if you aim to change your car fairly regularly. A Personal Contract Purchase (PCP) creates a contract term and monthly repayments – however it differs to a hire purchase in that the final purchase is optional.

You can either make one large payment at the end of your contract (usually between two and four years) to own the vehicle outright, or can return it to the provider and find a new car.

With the biggest depreciation of vehicles usually coming in the first three years of a car’s life, this might be a good way of banking against the loss in value of your vehicle; but only if you’re happy never to own it.

Personal loan

The traditional option and possibly the most cost effective; all depending on what rates are available to you at the time. Before you take the plunge, look at our guide on things to consider before taking out a personal loan. And if you’re ready to pick one out, then let Confused.com help you compare loans.

Step 2: What car to choose?

OK, now the money bits out of the way, you’ll want to think about what car best suits you at a price you can afford. Of course, as you were running through what you could afford, you no doubt had some ideas about the key features you’re looking for.

Here’s where the web can really come in handy. While years ago we might have wandered nervously around a showroom and reluctantly take a dealer’s word for it, there’s now a whole world of choice and information quite literally at your fingertips. Some top sites to help you choose the right motor at the right price include:

  • The AA’s Car Buyer’s Guide - this is an excellent stop to find reviews, advice and budgeting tools, to help you work out exactly how much each car purchase can cost you
  • What Car? – This is packed full of information on every single aspect of buying a car. Need to know the tax that would be payable on a new company car? Tips to reduce your fuel consumption? Valuation on a new motor? It’s all here.
  • European New Car Assessment ProgrammeIf you’ve got a family, or if safety’s just your thing, check out how your car of choice did in a variety of different crash tests. (TIP: The safer a car is, the better chance there is of reducing your car insurance premium)
  • ThatchamA great site to test how secure your car is against theft. Working with a five-star system, you can search for your shortlisted cars and see which is the most crime-proof. (TIP: This, again, could have an impact on the amount you pay out on your premium)
  • Car valuation - we've got a free tool which can give you a car's value in a matter of seconds. You just need to know its registration and mileage (which is obviously guessable if it's new).

Then there’s the bit you can’t do online; test-driving the car. It’s really important to do this to get a feel for your prospective motor, but you’d be amazed how many people don’t. Remember, taking a test drive with a certain dealership doesn’t mean you’re tied in to buying through them, so even if you’re planning to buy online, it’s well worth taking it for a spin first.

Step 3: Buying the Car

Stepping into the Showroom 

Here’s where it really begins to hot up. Entering the showroom can be a pretty dizzying experience, particularly if it’s your first time buying a car. However, if you follow a few very simple steps, there’s no reason why you shouldn’t come out feeling very pleased with your day’s work.

  • Stay calm. Remember that you don’t have to buy the car today or, indeed, from this particular dealer. Simply ask any questions you have and listen to the advice – but don’t be talked into anything you don’t want or don’t feel comfortable with. If you’re really worried, it might be a good idea to take a friend or family member with you (though don’t let them take over!)
  • Keep in mind what you came in for. If you’ve done your research, it’s likely that you’ll have a good idea of what you’re looking for before you enter. Whatever a salesman says, make sure you remember exactly what you’re aiming to use the car for and how much you are prepared to pay
  • Use your research. Showing that you know what you’re talking about can be a powerful tool when talking to a salesperson, and could well save you a lot of money
  • Extras/Add-ons. The chances are you’ll be offered a glamorous array of extra features when you do choose your car. Don’t let yourself be swayed and think about your budget
  • Haggling. When you’ve found the right car and the right spec, this is your time to shine. Some tips:

Be forceful, but don’t be too aggressive – this could easily lead to you getting the opposite result you want.

Remember what you want, and remember you can leave at any time if you’re not getting it.

Finally, If you’re approaching the right sort of price, be bold and make an ultimatum ('I'll take it now at £XXX...')

Used Car?

If you’re buying a used car, there are a few more things to consider. Take a look at our guide specifically tailored for used car buyers.

Buying Online?

While there are a whole host of sites offering help in the build up to buying your car, there are relatively few that allow you to actually buy online. However, there are some out there, and you might find that the result is a major saving – recent research from Which? found that 12 out of 14 popular new cars can be found cheapest on the net.

Bear in mind, though, that buying a car unseen is something of a risk, and it’s important to be just as thorough in questioning your dealer on the car as you would do in the showroom.

Some things to ask before buying:

  • Are there any car weaknesses?
  • Can I return the car if it has already been shipped?
  • Are there any costs involved in transportation?
  • How long will it take for the car to arrive?

This is especially worth considering as the cost of returning the car could be far greater than if you are simply buying from your local dealership.

Step 4: Finding the right Car Insurance

So you’ve got the car you want at the price you want – give yourself a nice big pat on the back! However, you’re not done yet. Finding the right car insurance is worth almost as much time and consideration as finding the right car itself.

For a thorough, step-by-step rundown of what you can do to find the right policy, check out our Car Insurance Buyers’ Guide.

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Stephen Jones

Stephen Jones

Stephen Jones was a reporter for Confused.com between 2009 and 2010, writing personal finance news and blogs. He has since moved on to MSN Money but continues to write for Confused.com.

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