How To Save Money Buying Your Next Car

Introduction

Buying a car can be a costly and expensive business and is likely to be the second largest purchase made after buying your own home. This article examines how you can save money on your next car.

1. Be clear about what you want

Before you can save money on your next car you need to first understand what exactly you want. It’s worth taking some time to think about what is and isn’t important in your next vehicle and what you are willing to compromise on.

a) Will it be used primarily for city driving our longer journey’s. City driving might require a more compact car choice to enable you to find those tight parking spaces and get good fuel efficiency. Long journeys might require more comfort

b) Is it a working car or is it just for fun? In which can consider whether you are willing to trade speed for fuel efficiency.

c) Will other drivers use the vehicle, and if so how will this effect insurance premiums?

2. Research

Good research is the key to saving money on your next car. Get a copy of the most recent vehicle trade handbook. This varies from country to country but it contains a comprehensive guide to the values or car types and models depending upon the mileage they have accrued and their age. You can also now find information online. Refer to this information when you see a car you are interested in to ensure that you are not paying over the odds.

3. Where to look

Three primary sources for finding a car are dealerships, via private sales through an individual and online. Some of the most popular places to pick up a good car and save money are exchange and mart and ebay.

You can save significant amounts on car sales through online traders because very often they don’t have the overheads of traditional high street dealerships. Buying new cars can see you save anywhere between 15-20% through such online traders as those listed above. However also consider buying a used car online as these can often bring about the most lucrative savings, particularly through auction sites like eBay.

A friend recently bought a pick up truck with a guide price of £1000 for £200 on eBay and it turned out to be excellent. However, the major drawback is that not seeing the vehicle may leave you open to buying a dud.

Traditional high street dealerships usually add a mark-up of between 15-25% to cars that they sell, so be willing to haggle.

Private sales are where the best bargain are to be found because individuals may not be so aware of current market prices, therefore enabling you to pick up the perfect vehicle at a reduced price. Look in the classified sections of local papers and specific car trade magazines.

4. New Versus Used

Whilst owning a new car may be important to some individuals, some of the best bargains can be found through used car sales.

Some dealerships often accept used cars in trade for new models that they sell in order to smooth the sale. Very often dealers don’t have the space to hold onto these used vehicles and are keen to secure a quick sale to get them out of the showroom. This especially true where, for instance, the dealer is tied into one car company like, Chrysler, but accepted a Ford in part exchange. They won’t be permitted to advertise it in the showroom and will want to sell it off quickly. It’s worth checking out the used car section of your local dealer to see if some bargains can be had.

5. Haggle

As mentioned previously most dealers and also those who sell privately, will add a mark-up of between 20-25% on the cars that they sell.

Never pay the ticket price always take time to inspect the car and see if there are any minor marks that you can use to build an argument for a price reduction.

Some useful questions to help you save money include;

a) What’s your best price?
b) I really want this car but not at this price, what can you do for me?
c) What discount can I get for paying cash?

Always ask for their best price three times before you give in, persistence pays of! Be prepared to walk away or say no if you are unhappy about the price, it’s amazing what an effect this can have on the price!

Also try to purchase your car towards the end of the month, ideally in the last 2 days. Most car dealership’s sales targets run from the beginning to the end of a month and if they are desperate for a sale to increase commission rates, they are more likely to give you the best possible deal.

Finally always see what other extra’s you can get thrown in, ask a question like “I’ll accept that price if you throw in a free tank of petrol.”

6. Inspect the vehicle thoroughly

A sure way to save money on your next car is to get it inspected before you buy. Take a mechanic friend with you to give the car a once over and always take it for a test drive. The test drive often reveals underlying problems with steering, suspension or unusual squeaky noises if they exist.

Most motoring companies now offer a comprehensive checklist that you can get a free copy of to help those with little knowledge of cars spot any immediate problems.

7. Decline finance deals

Most car dealers make huge sums of money on finance deals that they talk you into getting in order to purchase your car. Whilst it is tempting to get a car on credit, avoid it wherever possible or shop around for a low interest loan from a bank instead. Most car finance deals have high interest rates of between 15-25%, which on a £10,000 car will add between £1500 and £2500 to the final price of the vehicle during the term of the credit agreement.

8. Associated costs

Before you make your final purchase think about other costs associated with your car once you have purchased it.

a) Buying certain types of cars will push up your insurance premiums and may also make it more attractive to car thieves.

b) Diesel engines are much more fuel efficient that gas/petrol engines, saving your lots of money on fuel. Also many diesel engines can be converted to run on bio fuels like cooking oil, which can save you even more money on fuel in the long term as well as helping the environment.

There is a detailed article on how you can convert your diesel engine to bio fuel available online, I have included the link for this at the end of this article.

Summary

This article has focussed upon how you can save money on your next car. Consideration has been given the importance of good planning and research when starting the search

More Financial Planning articles available at http://www.friendsandmoney.co.uk/financialplanningarticles.html