Buying a Car

Other than buying a home, purchasing a car is one of the biggest financial decisions in many people’s lives. The options available can be complicated so if you want to get a good deal here are some important factors to bear in mind.

Firstly, decide on a budget and consider how you plan to pay for it. For example:

  • You could take out a loan for some or all of the cost, but remember that your ability to borrow for other things could be affected. If you do this always shop around for the best interest rate.
  • If you have savings consider if it’s worthwhile using them to pay. Compare the interest you’re earning on these savings against the costs of any loan you would otherwise need.
  • Hire-purchase could help you spread the cost over many months or years, but remember you don’t own the car until you make the last payment.

Next, remember that the price is always negotiable. Be prepared to haggle, even on brand new cars. These simple strategies can help to lower the cost:

  • Do some homework. Compare prices for similar cars. If you can show the dealer that you know what a realistic price is you’re more likely to achieve a discount.
  • Try to find out the invoice price. This is how much the dealer paid for the car and you should try to aim as close to this as possible.
  • Be firm. If the seller won’t match your price be prepared to walk away. You may find they agree to your terms once they realise they might lose the sale.

Once you see a vehicle you like, always take a test drive. Especially if your new car is second-hand, this can reveal potential faults. Listen out for unusual sounds and check for odd handling. At very least any imperfection can improve your bargaining position. In extreme cases it can identify serious faults which could have led to significant costs in years to come.

If you go into a purchase with a bit of knowledge it can help you to get a great deal. If you’re not confident in your own knowledge bring along someone more confident who can help you. By making the right choices, you can drive away confident that you successfully navigated this complex decision without damaging your finances.