Buying A Car On A Budget

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Cars are expensive commodities, but if you choose your vehicle wisely you can dramatically cut costs. There’s a lot of different factors that can affect the worth of a car and the subsequent running costs. Here are the big factors to consider that will help you save the most money.

Do you really need a new car?

Having a flash new car might turn a few heads, but in most cases it will cost you a lot more money to buy. There are a few vehicles coming in now that offer ‘free insurance’, but the sales price is deliberately high to make up for it. Most people buying on a budget will stick to used cars, allowing the depreciation to kick in. Some cars can get 20% cheaper by the year and you’d be surprised by how well they still run (and how modern they still look).

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But be careful of going too old…

You may be able to find a cracking deal on an old banger, but in a year’s time it may need every component repaired and replaced, racking up mechanical costs that may work out just as expensive as buying a new car. The mileage is important to take into account – cars that have done a lot of miles on the clock will have much more engine wear and tear. You don’t have to immediately replace the engine the moment the clock runs out, although many mechanics may recommend it, plus your insurance will go up. Make sure you buy a vehicle that has enough miles on it to cover the journeys you have planned. If that includes multiple roadtrips all over Europe, a newer car may benefit you more.

Don’t just stick to dealerships

Going private is almost always cheaper than buying from a dealer. You may be more limited to what you can find, but you won’t have to pay the added costs set by dealers to line their wallets. There are lots of second hand car sites with private sellers on that can help you make a decision. Always go and see the vehicle before you buy and be wary of sellers that withhold too much information.

Ask about service history

It pays to find out previous faults, plus anything that may have been brought up during the last MOT but still not fixed because it wasn’t important enough at the time. Give the vehicle a good examine if you can to check for bumps and scratches, or parts that look like they’ve been replaced – this can give you an idea of what the car has been through already, and what you may be in stall for. Most sellers should have a physical copy of a service record for you to look at. It is generally wise to always choose a vehicle that has these documents, otherwise you don’t what you may be getting yourself into.

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Go green

Owning an environmentally-friendly vehicle doesn’t just provide a sense of well being, it affects your road tax. As you may know, cars are divided into bands. Vehicles in Band A pay no road tax and include electric cars and other petrol substitutes. The higher up the bands, the more tax you will have to pay. Generally, newer cars are greener, however there are some older cars that have had adjustments made to them to reduce their emissions. Find all this out from your dealer before you buy.

Note that there are other factors that can affect tax (vehicles over 40 years old are exempt from tax regardless of their emissions, as are vehicles used by disabled people and vehicles used for agriculture).

Don’t be afraid to haggle

Bartering might not be something we’re used to in the Western world, but when it comes to buying cars, it’s fair game. Most dealers will in fact expect it, deliberately setting high prices from which they can negotiate down from. Take this into account when going in for a sale (this site offers a few handy haggling skills). If a dealer adamantly refuses to shift the price, try asking if they’d be willing to throw in any freebies on top. Be careful of car dealers that try to offer you bundles with other objects thrown in half-price – they could add to the overall value you’re spending and may well be a sneaky way of the dealer making up for the price reduction.

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Choose your loan carefully

You should ideally be able to lay down 20% of the car’s worth. This will prevent you paying a loan that lasts for years and gathers heaps of interest. If you can’t pay 20% – try saving up a little more first, or lower your budget.

On top of insurance and fuel, the car loan is going to be the biggest cost of your driving, so shop around before you buy. If you have a low credit score, avoid falling into a spiral of loan rejections and bad credit by going specialist (there are many companies such as Approve now that cater for car buyers with bad credit).

Take measures to decrease your insurance

After buying, your next biggest cost will be insurance, so take this into account when making the purchase. As already stated, there are some models that claim to be ‘insurance free’ but the sales cost is actually more expensive as a result.

Generally, more safety features will lower the sales price of a car. Whilst haggling, see if they can throw in any anti-theft features such as steering locks. For third party exclusive insurance, you may be able to buy some cars fitted with a black box that can reduce these premiums. Use an insurance calculator in combination with buying your vehicle, so that you don’t get sucked into buying a cheap vehicle only to find out that the insurance is astronomical because a higher percentage of drivers have crashed in one. There are many steps you can take after buying a vehicle to reduce insurance such as advanced driving courses and not making claims, but ideally you want to enter an insurance scheme at an affordable price.

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