Buying a new car is likely to be one of the most expensive purchases you will ever make, second only to your home! It is therefore essential that you are fully prepared for this event and aware of different options and potential problems. Below are some important tips for preparing to buy your new car, which you may find helpful as a print- out so you can tick off what had been done and see what still needs to be done.

Buyers Checklist

• Set a budget – this must be realistic. Do not be tempted to make the budget fit the car. Include the cost of insurance, fuel and servicing.
• Decide how you are going to pay – a car loan, finance through a dealership, full payment?
• Decide what you want – be sure to consider what you need in a car. Is it to travel long distances, transport children or just for you?
• Check the internet to get an idea of current prices, makes and models.
• Make up a list of cars that are suitable (fit within budget and needs).
• Take the time to browse around different dealerships – ask salespeople for prices and deals.
• Although expensive a new car offers reliability, with warranties covering any repairs needed for a set amount of time after purchase – check time and details of these with dealers and compare them.
• Test drive all cars on the list – consider comfort, handling, parking and even colour (you may have the car for quite a long time).
• Test drive for at least 10-15 minutes on a variety of surfaces to give an idea of handling.
• Decide on 2-3 cars and write a list of good and bad points about each one.
• Pick one car and go back to various dealerships – ask them what their best price for the car is.
• Remember not to but impulsively – if you are getting fraught then go home and try again the next day.
• Be prepared to haggle a bit with dealers – ask them what they will include for the price (audio equipment, mats, tank of fuel). You are about to spend a lot of money with them, so they are likely to want to come to a deal.

Take one last look at the deals on offer and decide.

Safety

You may also wish to investigate the safety and reliability of your chosen vehicle before you buy. There are a number of internet sites that offer ratings on safety aspects of cars. These are written by consumers as well as independent motoring organisations and cover crashworthiness, safety and reliability.

• Hwysafety.org.uk
• Trial.which.co.uk
• Euroncap.com
• www.theaa.com
• www.Smartcarguide.com
• www.Channel4.com/4car/buying-guide/advice/crashsafety-542

The Euro NCAP test

This tests the safety performance of popular cars sold in Europe. Although most new cars are now given this test it is worth asking dealers as to whether certain models have been tested. From the results of the NCAP test you will get a much clearer picture of how safe the vehicle is. It will be given ratings for front/side impact protection, full impact protection, a pedestrian test and a separate category for child protection.

Finance

You may have decided to finance your new car through a personal loan, through a personal contract programme (PCP) or through hire purchase (HP).

PCP

A personal contract programme/purchase scheme is similar to a loan, as you enter into an agreement and make monthly repayments. It usually requires a deposit of 10% – 20% of the vehicle’s value. They are often arranged through dealerships and salespeople stand to earn commission this way.

What makes this agreement different is that, at the end of the agreement the finance provider will calculate a likely resale price of the vehicle and the balance will be the amount you finance. Therefore, the monthly repayments can be substantially smaller than those of other types of finance.

At the end of the agreement you can give the car back or pay the minimum guaranteed future value of the vehicle (balloon payment), and keep the car. You do not own the car until this point, and if you do not continue with repayments you may lose the car.

HP

Hire purchase plans are the most traditional way to finance a new car. They are usually arranged through dealerships and salespeople earn commission this way, so be aware of current interest rates etc so as not to be paying over the odds.

You will need to pay a deposit of 10% – 15% of the vehicle’s value and pay up over 1 to 5 years. You do not own the car until the end of the agreement, and all repayments have been made. Therefore, you cannot sell the car until this point. Hire purchase plans are usually at a fixed rate of interest, which is not good if you happen to take out the plan during a time when interest rates are high.