The Definitive Guide To Buying A Car
- 8th December 2017
- Posted by: Loanable
- Category: Resources
TABLE OF CONTENTS
What a Car Represents
Chapter 1: The History
of Cars (in Brief)
and Their Cost
For the Rich
Henry Ford and Making Cars
for the Masses Classic and Expensive Cars
Chapter 2: Buying and
Financing a Car
Credit: Borrowing Money to Buy a Car Types of Car Finance
Hire Purchase or HP
Leasing a Personal Contract Hire (PHC) Bank Loans
Buying the Right Car
Buying a Car with Bad Credit
Chapter 3: Additional
Expenses Associated with
Owning a Car
Ways to Save on Insurance Maintenance
Petrol or Diesel
MOT and Road Tax
Chapter 4: What to Look for
When Buying a Car
New or Used/Previously Owned
What Kind of Car
Chapter 5: Where to Buy
a Car and How Car Buying
Friends and Family
Chapter 6: Alternatives to
Owning a Car
The Cost of Getting Around Walking
Chapter 7: Selling a Car
Selling a Car Through Guaranteed
Chapter 8: Tips for Buying a Car
Ways to Save
What to Look for Mechanically
It is one of the milestones of a person’s life, (pun intended), and that is when you buy your first car.
There are many milestones in someone’s life, such as finishing school, graduating university, getting married, having children, buying a property, retiring, etc. And while there may be the few that wonder… is buying a car really up there in the league of education, marriage and children, there will be just as many people who feel that yes, it is in that same stature.
A slight digression:
I had a conversation recently with someone who never plans to drive, so there for will never have the need to purchase a car.
They had their facts and story down pat as to why they will never need a car set in stone, and were perfectly content with leaving the driving to others.
And the fact is, not everyone wants to drive, and not everyone can drive. You first are required to have a drivers licence in order to drive, and as we will see, not everyone passes the test(s) required on the first, or even third or more attempt.
In preparing the ultimate guide to buying a car, it was hoped that it would help those looking to buy their first car, and maybe even provide some new information to those who have experience in purchasing cars.
As we will note here, buying a car has changed over the years…
What a Car Represents
Just like when we were children and got our first bicycles, and had mobility to get around, more so than just walking, having a car not just gives us that mobility, but can represent many other things, and one of those things is freedom.
Having a car provides us freedom to get out and about, and to get there when we want. We are no longer at the mercy of waiting on the bus, or the taxi service of mum and dad. We have our own wheels
With this freedom comes responsibility.
This new responsibility comes in many forms:
So when we start driving, and have this new found freedom, we also have some new found responsibilities. More of which we will cover and discuss in this guide.
Learning to Drive
Where to start but at the beginning, in order to buy a car or vehicle, we need, or rather should, learn how to drive one.
Buying a car does not have to be exclusive to driving one, but they tend to go hand-in-hand.
For many of the older generation that may be reading this, learning to drive was usually something a parent or relative taught us. Once we reached the legal age to drive, or close to that age, mum, dad, or a steady- nerved friend or family member, would take us out in the car to give us our first lessons on driving.
Many times in a field, or large car park where we had plenty of room, and no other cars to be in our way. Today the rules have slightly changed.
Getting Your Drivers License
Once you reach the legal driving age, and obtain a provisional licence, you can drive a car with someone who is eligible and has a full licence and has been driving a few years in the car with you.
You also have to display “L” plates on the car you are learning in as you drive.
Many parents do not teach their children how to drive today, and there is a huge market for driving instructors and driving lessons and schools. These lessons and schools are not cheap either. There can be a considerable expense or investment made, in learning to drive and passing your driving tests to obtain a full licence.
Some of these expenses are:
- £34 or more for a provisional licence
- Theory test can cost £23, in addition to the cost of study materials
- Practical test fees can be £62 or more
- The lessons themselves can run on average £24 per hour, and many instructors like to book two (2) hour blocks of time for lessons.
There are instructors that offer intense training and lessons, and some guarantee that you will pass, or you can continue to receive additional lessons.
There are those that do not pass their theory or driving tests the first time out. Some test centres have a pass rates of 50% or less!
Which not only means paying the fee to take the test again, but it may mean more lessons.
As you can see, it can get expensive just to learn to drive and pass your driving test, let alone buy a car!
That is why before you step-out to go and buy a car, especially your first car, but also even if you have purchased a car in the past, that you enter this car- buying arena will equipped knowledge wise with what you need to know.
Let’s begin by looking at a brief, and I do mean brief, history of cars and buying a car.
Chapter 1 – The History (in Brief) of Cars and Their Cost
Since we are going to be discussing how to buy a car, and some of the expenses associated with it, and the fact that when you purchase a car it is a large expense, we should look at the cost of cars over the course of time, from when they were first invented. For many people, after purchasing a property, buying a car is one of their larger expenses in life.
Since cars were first invented, they have not been cheap, but there have been times in history when wages were at a point that buying a car was not the huge expense it can be. There also were changes within the automotive industry to make owning a car less expensive as well.
There can be some confusion as to the actual “beginnings” of the automobile or motorcar as it was called, and who invented it; as there can be “eras” and “categories” used to define when the car was first developed, and who did this, and the type of car created.
Even with this confusion, the automobile has been around for well over 100 years, in fact more like 130 or so, which means there is probably no one alive that can remember a time when there was no “motor car”.
In fact it is probably safe to say, that in some countries, young people, or even those now in their 50’s or older, cannot remember a time when their households, and families growing up never had a car.
The automobile is that ingrained and a part of our world. Its impact on our lives and economies is huge as well, way too large to dissect and cover here. Just look at what the automobile industry has done for the steel industry, rubber industry, and how can we forget the oil industry! This petrol or diesel powered means of conveyance has even played important rolls in wars.
Without the car, our little world would be a very different place.
For the Rich
In the early days of the motor car, only the wealthy or rich could afford them. They were a “toy”, a novelty and a sight to see in the beginning. They also were not very fast, and noisy and smelly (gas fumes).
The cars in the beginning were hand made, and also outside the reach of the average worker. In America if the average annual wage was $1,970 in 1930, the average cost of a car was $600, or 30% of a workers yearly wages. By 2008 in the US if the average annual wage was $40,523, the cost of a car was $27,958, or 69%.
These costs and percentages have changed up and down over the years, but the fact remains, buying a car is a large expense; of course these figures represent buying a new car. We can and will see why many people opt to buy a used car.
Henry Ford and Making Cars for the Masses
While in the beginning of the history of cars they were expensive and outside the reach of the average worker, there were those that looked to find ways to reduce the cost to build cars and make them more affordable.
Henry Ford is the man usually attributed with this feat of industrial and economic marvel. It was the Ford Motor Company based in Dearborn, Michigan USA, that first began the use of an assembly line to reduce the costs associated with building a car. And it wasn’t just the assembly line that helped reduce the cost, but also the use of the same parts for the cars, and the same colour. Uniformity helped reduce expenses associated with building a car.
Henry Ford’s famous quote, “any color, as long as it is black”. Why just black? Because it was cheaper to make all the cars the same colour. So by reducing the cost of a car, and then by selling more cars as they were now affordable, Ford used a business model that worked off the economic principle of supply and demand, and also costs.
He built cars for less, and in doing so sold more of them. Profit per car may have been less, but by selling more cars, he made more profit.
Now that we have a very brief history as to the history, and cost of a car, let’s take a moment and have some fun and fast forward to some expensive and classic cars.
Classic and Expensive Cars
There are many very expensive cars in the world, some costing not just a million pounds, but millions of pounds! Many of these cars are custom made, or one of a kind, and of course, only the very rich and elite can afford them.
There are some cars that may have began with humble beginnings, and then over time, grew to cult status become classics, and worth substantial amounts of money.
Mustang: Since its introduction in the mid-sixties, the Ford Mustang has been not just an automobile success story, but one of the most collectable and desired cars in history. The various and different models of the Mustang over they years have many fans of the car, and also some models grow into the stuff
of automotive legend. These cars can go at auction for hundreds of thousands of pounds to millions of pounds.
Corvette: Another American classic car is the Chevy Corvette. These are sought after like the Mustang, and have the same die-hard collectors wanting them. And you don’t have to go back to the late 50’s or 60’s to find these cars growing in price, even some models that were made in the 80’s and 90’s are highly sought after.
Aston Martins: While many Aston Martins are sought after and collected, the DB5, featured in the James Bond film “Goldfinger”, is one of the more wanted models.
Morris Minor: This car and the next one mentioned are debatable, but also well loved by some collectors and car enthusiasts.
Reliant Robin: Another love or hate car. If you watched the TV show “Only Fools and Horses”, then you know the Peckham mobile.
One interesting thing to point out, is that some of these cars, such as the first Mustang, and the Morris Minor, were considered inexpensive cars for their time.
Not to “lump” together these other cars, but many Mercedes, Ferraris, and also other models, are also some of the more expensive classic cars collectors look for and pay “silly money” for.
I’m sure there are many of us, especially our grandparents, who had wished they had held onto their first car, or a car they owned in the past. Who knows what that car could be worth today???
As I had stated, this was to be a brief look back at the car and its history, and more so to look at the affordability and cost of cars in the past.
Now that we have a somewhat understanding of what a car may cost, let’s look at how to pay for this purchase, which for many may relay on financing, or borrowing money to buy a car.
Chapter 2 – Buying and Financing a Car
Now that we understand how and why we need a licence to drive, what it takes to obtain a licence, and also how much cars have cost over the years, let’s get into the fun stuff, actually buying a car.
One of your first ports of call is going to be, setting a budget. How much do you have to spend, or can you afford to spend on a car??
Your budget for this new car of your dreams, although it may be new to you but previously loved, will be based on two things:
- How much you have saved to spend on the car
- How much you can afford each month
And this affordability is not just in the form of possibly monthly payments should you require financing to buy a car, but also how much can you afford each month to keep the car on the road as there are other expenses in keeping a car.
But first, how are we going to pay for the car??
Nothing speaks louder than money, in particular cold hard cash! Paying cash for a car may also allow room to negotiate price, especially if you are buying a used car from a private seller, although some dealerships can be negotiated with as well.
There are also other instances when paying cash may make sense, such as if you have the money in savings to pay for the car, and the interest rates on savings accounts are very low. It may cost you more to borrow the money from a bank, then to use your own money and lose out on the small amount of savings that money may have gained you.
You could look at it in this perspective, you are using your savings and in essence borrowing from yourself. So if you were to pay yourself back each month, in the form of putting money back into savings, you have your savings again, and a car.
Just a different way of looking at things.
Of course not many of us have money saved to buy a car.
We may save up for a deposit, or have some savings, but depending on the car you wish to buy, they can be expensive, and so in order to buy a car then, we need to look at some form of financing, or borrowing the money to buy our car.
Credit: Borrowing Money to Buy a Car
So here we are, we want to buy a car, the car may cost £xxxx and we do not have the full sale price of the car…..what to do???
Get a loan, borrow the money to buy the car.
Many loans used to buy cars are secured loans, meaning the car is collateral for the loan, so if the borrower dos not pay the monthly payments, the car can be repossessed.
Repossession is the downside/negative part, let’s look at it in a more positive light, secured loans in some instances can be easier to qualify for and be approved for.
One thing we do need to be aware of prior to borrowing money to make any purchase, including a car, is this a wise move.
A few questions to ask oneself:
- Do we need to borrow money, is there alternatives
- Do we need a car
- Can we save the money to buy the car
- Do we need thi scar, or can we do with a less expensive car
- Can we save more of a deposit, and borrow less money for the car
- Which is the best finance option for our situation
Types of Car Finance
If you are not paying cash for a car, then you will need to borrow the money, or look at some form of car financing, of which there are four (4) main forms of car finance.
Personal Contract Purchase or PCP: Personal Contract Purchases to buy a car allow flexibility and choice in what cars to buy, but also are slightly more complex than other forms of financing.
You are required to pay a deposit and monthly payments, similar to other forms of financing, however, these payments can be smaller than payments associated with other forms of financing.
In the end you pay for these smaller upfront and monthly payments, as a “balloon” or lump sum payment is required at the end of the financing contract.
Your options at the end of the contract are:
- Pay the large final payment
- Hand the car backand “walkaway”
- Use the value of the car to work out a deal on a new car
Hire Purchase or HP
Hire purchase contracts are not limited to being used for cars, but can be used for other purchases as well.
The buyer makes a deposit payment up-front, and then monthly payments as agreed until the car or item is paid in full.
In the instance of financing a car, the ownership of the car is not transferred to the buyer until the loan has been paid in full.
Using HP financing to buy a car does offer flexibility in the payments and terms of the contract. One downside is that you do not own the car until it has been fully paid for.
Leasing or Personal Contract Hire (PHC):
Leasing a car or PHC, is another form of financing a car, however, similar to PCP, you do not own the car at the end of the lease.
Think of PHC as letting a car for a period of time, like a hire car, but for longer periods.
The lease agreement will outline your monthly payments, and also how many miles you are allowed to put on the car during the term of the lease.
At the end of the lease term, you return the car, however, there can be charges for excessive mileage or damages done to the car.
This is just as it says, you go to the bank or lender and ask for a loan to buy a car. These forms of loans can be broken down into a few types of loans, but really come down to secured or unsecured loans.
You can either go to a bank or lender and find out how much of a loan you qualify for, then buy a car in that loan range, or find the car of your dreams and go to the bank or lender looking for a loan of that amount. These loans can be secured against the car, meaning if you do not pay the loan the car can be repossessed, or the loans can be unsecured, such as a personal loan.
If your financing is a personal loan, you borrow the money, go buy the car and make the loan payments. The loan, while used to buy a car, is not secured by the car.
As you can guess, getting approved for a car loan, prior to car shopping has its advantages. You can be seen as a cash-buyer, as you can simply advise the seller you have the money ready to make the purchase.
Getting approved prior to shopping also avoids any disappointment.
If you find the car of your dreams for £10,000, and an only get approved for a loan for £8,000, you may not be able to purchase that car unless you can bridge the gap of £2,000.
This leads us to buying the right car.
Buying the Right Car
One of the first things to look at when buying and financing a car is to buy the right car. And I am not writing about buying a right hand or left hand drive vehicle.
You need to not only choose a car you like, but one that fits your needs and budget.
Just as we looked briefly at some classic and expensive models of cars, not everyone can afford these cars. And in looking at the right car we can afford, we also need to look at operating costs, how much is the car going to cost us over and above the monthly financing payment.
We will look at and cover this in more detail later on.
If your budget allows you a car payment of £150, then you look at what cars a £150 a month will buy, and also consider the petrol costs, MOT, tax disc, and the largest expense of them all, insurance.
If your monthly finance payment is £150 a month, and the operating costs are£75 a month, you need £225 a month in order to not just purchase, but also operate the car each month.
You may be able to afford a car’s monthly payment, but then after buying it later finding out the insurance or operating cost are high, can be a bit too late.
If you look at what these operating costs can add up to be over the years, it is staggering!
These additional operating expenses are something we need to keep in mind when considering which car to buy, and how to finance it.
Buying a Car with Bad Credit
As we have discussed, not everyone is going to have the cash to just go out and buy a car, so we need financing. And not everyone is going to have perfect credit, or a high credit score, which may allow them to be approved for a car loan. There are those with weak, poor, or no credit, that still need a car for work, or for other reasons, and need financing.
So how to buy a car if you have a low credit score, or bad credit?
One of the first things to do is to obtain a copy of your credit report and credit score and see what it says. Your credit history may have errors or omissions that can be corrected to improve your credit score.
Here are a few tips on buying a car with weak, poor or no credit:
- Save for a larger deposit: The more money you put down as a deposit on the car, the less you need to finance, and the more likely a bank is to approve the loan.
- Buying the right car and showing affordability: Just as we mentioned buying a car that fits into your budget is important, so is showing affordability. Showing the bank or lender your expenses and income and how you can not just afford the car payment, but the expenses associated with owning a car.
- Have someone co-sign or act as a guarantor for the loan: Having a family member, partner or friend, co-sign or guarantee the loan is another way to help get approved for a loan.
There are banks and lenders out there who specialise in lending money to people with poor or bad credit.
You do need to be aware of the interest rates that may be charged, and also the terms of the loans.
Don’t always just sign a loan agreement based on just the monthly payment as you feel it is affordable, or you have told the lender you can afford £150 a month, and the loan magically comes in at £150 a month. You need to know the full terms of the loan contract in order to make the best and most informed decision.
Now let’s look at some of the additional expenses associated with owning a car, and what things to look for when buying a car.
Chapter 3 - Additional Expenses Associated
with Owning a Car
In considering not just what car to buy, but also affordability in what car to by, we need to know what it will cost to operate our new car; what are the additional expenses associated with having a car.
And there are a few, some of which can be quite costly depending on your age and what kind of car you drive.
Depending on who you ask, and a few other factors, will get you a wide variety of responses as to how much on an annual basis it costs to operate a car. It can be anywhere from a couple of thousand pounds a year to many thousand of pounds. Of course much will depend on your car.
So again, choosing the right car is important, and we will discuss this more in detail coming up.
So what are these additional expenses:
- Petrol or diesel
- Tax Disc
- Maintenance and upkeep
Let’s take a moment to look more closely at each of these operating costs of owning a car.
By far one of the largest expenses a person has when they buy a car is the insurance to cover the vehicle, and in many instances, any other damage that may occur to someone else’s property in an accident.
According to the ABI/Association of British Insurers, the average insurance cost in the UK is £462 a year.
Others, such as confused.com, state this figure is much higher, and closer to £800 a year.
Of course for some new young drivers, insurance costs are not just eye watering, but down-right prohibitive!
If an insurer gives a quote of £2,500, or £3,000, or even £6,768 a year for car insurance, odds are it is unaffordable. In essence the insurer is saying, we don’t want to insure you as a young driver; you are a high risk.
In researching this myself, I spoke to two new young newly licensed drivers. One driver was age 19, the other age 20. Both had recently passed their driving tests and had been shopping for cars; reasonably priced cars, around £3,000.
Both were quoted annual insurance premiums that exceeded the cost of the car, one even with using a “black box”. More on “black boxes” in a moment.
So how do insurance companies come up with these rates, and what can we do to reduce the cost of car insurance. Some factors involved in calculating car insurance:
- The car you drive: Insurers base premiums on the car you drive, cars with better safety records can receive a lower premium.
- Where you live: If you live in a city, or in a high crime area, your insurance premiums can tend to be higher.
- Where you park the car: If you have off road parking, or a parking pad, or garage, your premiums may be cheaper.
- How you drive: If you have claims or points on your license, your insurance will be higher.
- Age and experience: Once again, young drivers are at a disadvantage.
Ways to Save on Insurance
- Shop around: Always shop around for insurance quotes, there are many comparison and insurance web sites to get quotes from.
- Use a telematics or “black box”: This is a device that is fitted to your car and monitors your driving. It monitors your speed, braking, and other driving habits, and can report this back to the insurer, who uses it to reduce or raise your insurance premiums.There are two factors to consider here, besides the fact it can reduce your car insurance, and one is there may be an initial cost to you the owner of the car to fit the device. Second, if your driving habits are poor, your insurance may be raised.
- Increase your excess: Raising the excess on your insurance policy, or the amount you are responsible for if you are involved in an accident, can reduce your insurance premium. You need to balance this out, and in some instances, a gap insurance policy may be needed.
- What extras are on the policy: Do you need all the “bells and whistles” some insurance policies have, such as roadside assistance, rental car coverage, etc. By not having these you may be able to reduce your insurance costs.
- Add a second driver: Adding another driver who is experienced and has no claims, can help to reduce insurance costs.
- Limiting mileage: Limiting the mileage you drive a year, or by putting a cap on the mileage you drive, can reduce your insurance premiums.
As you can see, insurance costs are a huge factor that needs to be considered when buying a car. And again, buying the right car is essential in part due to the cost of insurance.
If you own a car, eventually something is going to break or wear out. It is inevitable.
Even if it is just tyres that need replacing every few years, that alone can be a £100 or much more depending on the car and the size of the tyres.
On average it is believed to cost around £400 a year for car repairs. Again this figure can vary and change depending on who you ask, and also, what kind of car you have. That is why research prior to buying a car is important.
Not just the safety record, but also the repair records. Some cars have better repair records than others, and are cheaper to operate.
You may also want to look into extended warranties for your car. These warranties can protect you against certain breakdowns, or repairs that may come along. They are an additional expense, but may save you money in the long run.
Petrol or Diesel
Now that you have your car, it doesn’t drive on air, no it requires petrol or diesel to get around. And depending on the mileage it gets per gallon or litre, and the mileage you drive, this can be a costly expense.
Fuel prices vary, but they still are well over £1 a litre, and if you drive a lot, it is going to mean more stops at the petrol station.
Let’s do some calculations here, and just make some assumptions:
- You drive 6,000 miles a year, which is under the average of well over 7,000 miles a year.
- Your car gets 30 miles per gallon as an average around town, which is where you do most of your driving.
- Petrol in your area is averaging £1.19 a litre.
This means you require 200 gallons of petrol a year to get around, and at £1.19 a litre, it takes 4.55 litres to equal a gallon, so £5.41 per gallon of fuel. £90.24 each month.
That is almost an additional £100 a month, on top of insurance and any maintenance.
MOT and Road Tax
All cars that are driven on roads in the UK are required to have a current MOT and pay road tax.
Even if you keep your car “off-road” you need a SORN or Statutory Off Road Notification.
Once again the type of car you have will affect the cost of the road tax.
Even if it costs you £120 a year for the road tax, this is an additional expense of £10 per month.
MOT or Ministry of Transportation test costs can vary as some stations offer the inspection at a reduced charge. The maximum fee that can be charged is £54.85 for a car.
However, this is just for the inspection, any repairs that are required will cost more.
One again another expense if you own a car.
Fortunately there are calculators and ways to figure these costs so we have an idea of what we may be spending to keep our cars on the road.
Just as we should get an idea of how much insurance will cost us, we should get some idea of costs overall prior to buying a car. This will save us from any nasty financial surprises later on.
As you can see, by adding up these additional expenses, it can easily cost £200 a month, in addition to any car payments we may have, just to keep our car running and on the road.
So picking the right car is important for a variety of factors, and what to look for in a car is what we will be discussing next.
Chapter 4 - What to Look for When Buying a Car
Just as we discussed in financing a car, and the additional expenses that can come up from having a car, you can see why you need to buy the right car, but how do you go about finding the right car, what do you look for when buying a car??
Buying a car is an emotional experience, and people associate so many things with buying and owning a car.
What we drive says a lot about us.
But the fact is a car is a conveyance, and a means for mobility and to get around. We may want a flashy, fast, two seater convertible to sport around in, but the reality may be that we are a family of 5, with small children and an estate is more where we are at.
So some questions to ask yourself, and things to consider and look for in buying a car. This is a big expense, and we would like to get it right the first time.
New or Used/Previously Owned
One of your first decisions in buying a car is, are you looking to buy a new car, with that “new car smell”, or a used car.
One large factor in deciding between a new and used car is going to be the price. New cars are going to be more expensive that cars that are a few years old.
This is due to depreciation.
Cars lose value over time, in part due to wear and tear.
Some cars lose up to 35% of their value in the first year, and lose up to 50% of their value in the first three (3) years.
One way to defeat this loss of value is to not own the car during the period where it will depreciate the most, the first few years.
So expense and depreciation will have in impact in what car to look for and your considerations, as some vehicles don’t lose their value as quickly as others.
What Kind of Car
It is always best to start at the beginning, what type of car do you need, and then what make and model would you like.
You’ll notice I said/wrote NEED for type of car, and then WANT for make and model.
This just leads back to the wanting a convertible, but living in northern England and having 2 kids, which makes a convertible not practical.
Wait for your mid-life crisis to go for the red convertible.
There are many types of cars:
- MPV’s or multi-purpose vehicles
- And convertibles
Each body style has its own characteristics and purpose, as well as style and features.
One way to know what type of car is best for you is the purpose or reason you need a car, and what you will be using it for. How much space do you require in a vehicle.
If you are single, and live in a nice dry area, sure, go for the convertible if you an afford it, and the other expenses it may generate.
A family may wish to purchase an estate or saloon, or maybe a hatchback.
If it is just you in the car and don’t drive long distances, then you could look at a smaller, less expensive car, and one with lower or reduced operating expenses.
If you plan on using the vehicle for work or to haul items around, possibly tools, then a small van may suit your needs.
While each car has its own purpose, they also vary in how expensive they may be to operate.
How far do you need to drive each day, week, month, or year?
The mileage you put on a car is going to have a huge affect on your annual operating costs, not just in the form of petrol/diesel expense, but also insurance, repairs, and maintenance such as tyres and brakes.
This can also be dictated by where you live.
If you live in a remote village somewhere, and shopping and work is further afield, then your annual mileage will naturally be higher.
Reviewing the safety records of the cars you are considering to buy can have a huge influence on what your decision is.
Not only can you save on insurance expenses by having a safer vehicle, you can also have piece of mind if you drive your children around for school runs, or have other family members in the car on a regular basis.
Looking at these safety records, does the car have:
- Front air bags for both passengers
- Crumple zones
- Side airbags
- Have there been any recalls or known faults with the car, other models, or the manufacturer
In looking at your needs and what to consider when buying a car, it is not all clinical and dry as mileage, safety records, etc, there can be some fun in it for you.
What features do you need and what features do you want on your car.
If you plan on pulling a caravan or something, obviously a larger engine may be required.
Do you like to see the sun and moon, then a sun roof would be nice.
- Power windows
- Nice stereo, one that allows you to play your iPod
- Comfortable seating, perhaps heated
- Cruise control, if you do a lot of motorway driving
It can be fun as well as practical in what cars to consider.
Another consideration in choosing the right car, and as important as looking at safety records, is repair records.
Knowing the repair records of the cars you are considering can save you money for maintenance later on, and aid in your decision making.
If you are purchasing a car from a private seller, have they kept all their maintenance records.
Knowing the reliability of a car before you buy it can influence your decision on which car is best for your needs, and what you can afford. Once you have looked at all these considerations and factors, you will have a better idea of what type of car you may require, now where to find that magical mystery car we want.
Chapter 5 – Where to Buy a Car and How Car
Buying Has Changed
You know you need a car, or you know you want a car.
You have set yourself a budget of what you can afford to pay each month as a car payment, and also for operating costs.
You’ve decided on either a new or previously owned vehicle.
Now, where to find that golden chariot of conveyance?
If you are of a certain age, then you have witnessed the many ways and changes that have passed over the years in buying a car.
Having your own set of wheels is a huge passage when you reach the age you can begin lessons and drive. Driving gives you freedom, freedom of travel; having your own car just expands that freedom. It also will not expand, but decrease your wallet or purse due to the expenses associated with owning a car, which we have discussed.
Recently I read where a parent was buying a car for their child as a present for passing their driving test; which in itself seemed like a huge gesture as I thought to myself, how many parents buy their children cars these days??
Not to digress, but it appears that many parents do help their children in buying a car, and in keeping that car, to the tune of £2 billion! A survey by Kwik Fit found this out, that 59% of parents with children aged 17-25, contributed on average £381 a year to keep their kids driving, and 10% contributed £1,00 or more.
The survey also showed one-in-five parents either purchased a car for their kids, or contributed to the purchase price.
The Communications Director at Kwik Fit, Roger Griggs stated, “Becoming a motorist and passing the driving test is exciting, but it can also be expensive, particularly for young people who are unlikely to have much in the way of spare income.”
“There’s often a temptation to cut corners to help bring costs down but this is likely to be at the expense of safety, so it’s good to see parents are keen to help cover these costs.”
So parents are willing to help their children out in buying a car.
Which can lead to a new realm of how people shop and buy cars.
How the world has changed, especially when it comes to making purchases and being consumers, and why should buying a car be any different.
There are still the same fundamental ways to buy a car today as there were years ago, do you buy new or used, dealer or private owner, but showrooms have changed and the process is quicker.
There also is the Internet.
We now have “mobile showrooming” where people use their mobile phones to view and check out potential cars they wish to buy.
Research showed that 75% of people buying a car used their mobile phones at some point in the buying process.
There isn’t the hours of waiting at the dealership. You can arrange financing if need be, order the car you want online, and go pick it up. Sometimes within hours.
Online searches can reveal just about anything and everything you may want, or need to know about a car.
There is a wealth of web sites available for us to sit from the nice confines of our home, using our computer, tablet, or mobile phone, and shop for cars.
You can view photos of the cars, mileage, features, and of course, the price.
These web sites have various filters which allow you to narrow your car search down to very specific types and models, very quickly.
Of course even with this great use of technology, when you purchase a car, it still can come down to three (3) areas or people you buy a car from…
Originally cars were sold to the general public through dealerships, almost like stores just to buy a car; and in the beginning, dealerships offered just one manufacturer’s car. Today’s dealerships sell many different cars, not just one brand or manufacturer.
And of course, dealerships use the Internet to advertise and list the cars they have to sell, new and used.
When the image of car dealership comes to mind, many people think of haggling or negotiating with the sales person over the price of the car, and this still occurs. However, there are dealerships that have a “no haggle” policy. As to if this gets you a better deal, it may or may not, you still need to do your research.
The pros of a dealership are that you have recourse in the form of a warranty of some kind should there be an issue with the car. This warrant can be in writing, or implied. The dealership may also have service records for the car, or have completed an inspection of the car prior to placing it for sale.
The one downside is you may pay more for a car, I say/write may pay more. Dealerships do have expenses and overheads to pay.
Here is where the art of negotiating can save you money, but not if you have not done your research and know what to ask of the seller.
Most people selling their cars today use the Internet. And with so many free web sites out there, why not.
The pros of buying from a private seller is price, you may save some money. However, “caveat emptor” or let the buyer beware.
If you purchase a car from a private seller, they may not have the service records, or may not have kept up the maintenance for the car. And while not to put you off, they may not be totally honest in full disclosure about issues with the car.
You need to do your research, take a trusted mechanic with you if need be, and test drive the car. Later we will be discussing more on what to look out for when buying a car, and also some much needed car buying tips!
Also keep in mind, and this is a big one to keep in mind, private sellers do not offer warranties.
Friends and Family
This is the same as a private seller, however, you know who you are buying the car from, and in some instances, may know the car itself and its maintenance and service records, and if it has been driven carefully with the love you would want it to have received.
Negotiating may be more difficult with someone you know, and if the car turns out to be an issue later, such as it needing repairs and not being that reliable, it could hurt the relationship.
Through a Business: In some instances, the company you work for may have cars for sale, business vehicles they have used and now wish to sell on.
This is similar to buying from friends and family, however, hopefully the serving of these vehicles is current and documented.
You can also purchase cars through auctions, and while a way to save money and perhaps bag a great deal, you need to be careful.
Physical auto auctions are a different animal then online auctions, such as eBay.
Auto auctions are where buyers of all sorts, dealers and private buyers, all gather to bid on the vehicles offered to go under the hammer.
You can check the vehicle prior to bidding, and there is a description of the cars given out, but unless you know what to look for, or take some one who does know what to look for, you need to be aware of what you are doing.
As with any auction, research, watching the bidders, and knowing how auctions work is essential.
British Car Auctions’ Tim Naylor has stated, “It is very important to listen closely to what the auctioneer says, as his or her description is a legally binding selling statement.”
The reason for this is due to the fact that what the auctioneer states at the time of the auction, “supersedes” any description or handout or flier you may have previously received on that car.
Just as we need to be careful with our details and other aspects of our lives, such as our computers and web sites we visit as not to pick up a virus or “ransomware”, we need to be careful when buying, or even selling a car due to the many scams that are out there.
These scam are for car buyers a well as those private individuals selling a car.
The foundation of any scam is to get your money, or details to then get your money.
With this in mind, it can be helpful in avoiding scams.
Some things to consider if you think someone may be scamming you:
- The price: Is the price for the car low, too low, well under what other cars like it are being sold for. This could be a tip-off.
- Money upfront: Nothing is as good sign of a scam then the seller asking for the money upfront, before delivering the car, or not at the same time as you taking possession of the car.
Also with offering a discount for cash sales, and as many private sellers want a cash payment, and you have negotiating room with cash, but you also need to beware.
Asking for half or part of the sale price now, and part or remainder of the money later is another tip-off.
- Can the seller even sell the car: Does the seller really own the car they are selling? Does the car have outstanding finance on it, is the car in “category C or D” was it previously written-off. This is where a HPI check is essential.
You would not want to buy a car that had previously been in an accident or seriously damaged, and if a car has financing on it, the seller may physically have the car, but may not legally own it.
You buy the car only to find out the seller had financing on the car and has not paid the payments and an agent for a bank or car finance company is looking to repossess the car.
More on HPI checks when we discuss tips for buying a car. We have to keep your interest in reading this guide don’t we:)
- Car Clocking: Car clocking is where the odometer of a car or vehicle is turned back to show less mileage then what it has actually been driven. It is felt that for every 1,000 miles that is removed from a car, it increases the car’s value.
Obviously if a car is being sold with only a few thousand miles on it, a buyer may feel the car is in great shape, only to find out the car has has excessive use.
To avoid this scam, review the mileage on the MOT and the date of the MOT, also the mileage on any service records to see how they compare.
So we now have an idea as to where we can go to buy our newish car, and what we can expect.
Even with buying a car from dealership, or someone you know, there still can be the negotiation process.
This is where doing your research on the car you want to by is crucial. Knowing the average costs associated, prices, and especially shopping around.
So the process of buying a car has changed, but in as much as things change, they stay the same.
Chapter 6 – Alternatives to Owning a Car
In discussing how to buy a car, and financing a car, and also all the expenses associated with owning a car, we need to look at other options; what options are available to those that chose not to drive and own a car, or those that for whatever reason decide they do not want to drive.
If you remember from the very beginning of our little guide here, I had a discussion with someone who stated they were never going to drive. They had thought this through very well, and one aspect as to why they wished not to drive was the cost, they felt they could save money.
But could they really save money??
The Cost of Getting Around
We all need to get around, to get from point A to point B and back again. And sometimes we need to get from point A to point B, to point C, and then back again.
Unless you live in a remote village somewhere out in the middle of nowhere, there are a variety of ways to get about; numerous modes of transportation.
In looking at modes of transportation, and what the cost factors are, it can be surprising how much it can cost when you look at these costs over a period of time.
The oldest and cheapest way to get around, also a healthy one as well.
While all of us may walk at different speeds, on average we walk at around three (3) miles per hour. So not the fastest way to get around, but if the weather is good, you can enjoy the scenery and look around as you get from point A to point B.
And just think of the calories you will burn off.
I know a few people who go to work and get around on a bicycle. It is similar to walking in that there are health benefits to the exercise, and it is a cheap form of transportation. You can buy a used bike cheap, or a new one from anywhere of £200 up to £2,000 or more.
If you cycle in London, do be careful.
Two high points in many people’s lives we have discussed is when they pass their driving test and get their drivers licence, and when they buy their first car.
Having the ability to drive, and having a vehicle to drive represents freedom. You can go where you want, when you want. However, that freedom can come at a price.
Costs of Owning a Car: Having previously discussed this, we know that owning your own car is not cheap. There are many expenses associated with driving and having a car, not to mention the initial outlay of the price of the car.
The UK is one of the most expensive places in the world to own a car. On average operating costs here can be from hundreds of pounds a year to around £3,500 a year! Much can depend on where you live.
The majority of this expense is for petrol, which is currently on average under £1.20 per litre. So depending on the number of miles you drive weekly, monthly or annually, you could be spending anywhere from £1,000 to over £2,000 a year, just on petrol.
You also must factor in car insurance as well. If you want to drive in the UK, car insurance is mandatory. The average annual premium for adults, depending on where you look and ask is over £500, and if you are age 17 to 22, the price goes up to over £1,700 a year or higher!
The Co-Founder of the Fair Fuel Campaign, Howard Cox said, “many drivers end up spending an incredible 15 per cent of their income on fuel, with the Treasury taking 60per cent of what drivers put into their tax on duty and VAT”
“In a recent FairFuelUK poll of 25,000 supporters, more than 87 per cent said that their cost of living is worse when compared to 12 months ago because of the high cost of petrol and diesel.”
15% of your income may be an average, there are some of us who may be earning a low wage, so that percentage could be much higher.
So what about some other modes of transport, are there cheaper ways to get around.
For many people owning a car is not going to happen, and it could be for many reasons. It may be the cost of ownership, or the fact we don’t have a licence to drive. That leaves us with the option of public transportation to get to work, shop, and generally get about. And what are the costs associated with these conveyances.
Bus: Unless you are age 65, or receive certain benefits, and have a free bus pass, you will need to pay to ride the bus. In my city there are two bus services, with different pricing. A single one-way service is £2.10, while the other service is £2.30. Return fares offer a small savings, and you can also purchase day passes for £5.50.
If you are planning on riding the buses on a regular basis, such as getting to work, you are better off purchasing a weekly or monthly pass. Weekly passes can be as cheap as £15, and students get a discount as well. One service offers an annual bus pass for £522. Which is a significant savings. And also much cheaper than operating a car.
In London the bus fares are higher, however, still cheaper than owning a car. If you consider the additional expenses of paying of parking and congestion charges, owning a car in London can be very expensive.
Rail: Years ago I took the train to work. It was only a 15 minute train ride and at that time a monthly pass cost me £104. Over the years the fares increased and in the end before I bought a car, I was paying £155 a month for the rail pass. At that point I felt driving myself was a better option, and the monthly expense was about the same.
Depending on the zones or areas you need to travel to, you may be able to buy an annual rail pass for less than £700, which again is cheaper than owning a car.
Of course in London the fares are higher. Depending on the zones you need to travel to and through, you could be spending over £120 a month to as much as £200 a month. Annually almost £1,300 to as much as over £2,000.
Another consideration in choosing public transportation is dependability and running on time. My experience with the rail and bus services throughout the UK has been pretty good. I say pretty good as while they do tend to run on time and are somewhat dependable, when they don’t it causes a major headache.
You also need to keep in mind when using public transportation, you are sharing the ride with others. There is no privacy or alone time in the journey. That can be a good thing as people watching can be entertaining.
One large factor in using public transportation is your time. How much is your time worth?
If not having a car adds 30 minutes to your commute to work, or makes it more difficult, or takes more time to do your shopping, how much is this time worth to you.
Owning your on vehicle means you can just go out, get in the car and drive to your destination.
Taxis: If you don’t want to own a car, and want to avoid the crowded public transportation means, there always is taking a taxi. However, while you are getting a private means to get to where you are going, taxis can be expensive. Taxi fares vary according to city and journey, and also if you take a private hire taxi, or a standard black cab. In some cities for two people to take the bus to town it would cost £4.60, or more for singles, no return. A private hire taxi can be £4.00, with tip. So not only a cheaper option, but a quicker and quieter one.
And again, it will depend on the distance.
When you add up the total costs involved to travel here and there on an annual basis, it does seem like a lot. Especially when you look at the cost of owning a car and driving here. It does make walking more attractive as it is cheap and healthy.
But still….owning your own car…..
Chapter 7 – Selling a Car
If you are going to buy a car, then logic dictates at some point you may be selling a car.
And one of the best way to sell a car is….wait for it…..online!
There are two ways to sell your car, both begin online, one is to sell it yourself privately to a buyer, the other is to sell it to a dealer or dealership, and dealerships can be broken down into two categories, one being those that guarantee to buy cars, such as webuyanycar.com.
We will discuss this form of selling a car in just a moment.
If you remember what you went through when you bought your car, be it through a dealership or private seller, it is good to keep all this in mind when selling a car.
Knowing what a buyer may be looking for, and the art of negotiation, all the things you researched and did prior to buying the very car you are now about to sell, you want to remember when selling a car.
So what things should you do to get you and your car car ready to sell:
- Clean it up: Make sure the car is cleaned, maybe even have it detailed to make a good appearance.
- Records: Get all the service and maintenance records together, as a buyer you would want to see and know these.
- Research: Do your research on prices and what your car is selling for these days. You don’t want to price yourself out of a sale, or sell your car for less than what you may be able to get for it. Do a valuation prior to pricing the car.
- Bottom line: Know your bottom line, what is the lowest amount you will take for the car. Just as you wanted to haggle or negotiate over the price as a buyer of a car, so will your potential buyers.
- Take clear photos of the car: Take clear photos (multiple pictures) of the car, and from all angles. Show all aspects of the car, make sure they look good when you post them online.
- Use free online services: There are many free web sites that you can use to sell your car, why add any additional costs to selling the car if you can avoid it.
- Know what it is costing you to sell the car: If you pay to get the car cleaned, note this, if you pay for an ad online or other for of ad, keep track of this, and since you need to keep insurance on the car until it has been sold, you may want to factor this cost in as well, especially if you have already purchased another car while waiting to sell this one.
Some things to be aware of:
- Don’t get scammed: Insure the funds for the sale are good and clear your bank before releasing the car. In many instances buyers will pay cash, as sellers require a cash payment.If you are to receive a bank transfer, insure the funds are in your account.Be aware of any PayPal scams as well.
- Documentation: Get all the buyer’s details, and confirm them with identification. Make sure you have all the details of the car registration number, date and time of the sale, all this in duplicate, one for you and one for the buyers; and insure both are properly signed.
Make sure the receipt states “sold as seen and no warranty is given or implied.”
You give the buyer the V5C2 new owner section, and you need to make sure you record the sale on the DVLA’s web site. This way you are not responsible for any future fine or tickets.
Also confirm with your insurer when you can cancel the insurance policy.
When selling a car, you can also consider part exchanging the car or trading it in.
This is where a dealership gives you an amount of money for your car that is to be used to purchase a new or another car from them.
In some instances you may receive more in value than other guaranteed sales, but less than if you sold the car on your own.
The dealer wants you to buy another car, so they may be generous with the valuation. However, you need to be aware and watch out for an inflated sale price of the car you wish to purchase.
If using your old car as an exchange, it is best to get the dealer’s bottom sale price, prior to mentioning the part exchange.
Selling a Car Through Guaranteed Sale Companies
seen the ads, either online or on the TV, companies/dealerships that guarantee to buy any car.
What could be easier as a seller then to know and be guaranteed to sell your car.
If it sounds too good to be true, it may be too good to be true. But the facts are if you cannot sell your car, and wish to be rid of it, these companies do provide a needed service. However, you may pay for that service.
In essence the service works like this:
You send your vehicle registration number and other details to the company that will buy your car. They review this information, and place a valuation on your car and tell you how much they will pay/buy your car for.
Sounds good so far, and it is.
The price they will pay has a time limit or expiry period, and sometimes a mileage limit, this is so you don’t drive around and add hundreds of miles to the car, and the valuation is based on the car being in good condition, and the condition you described at the time they valued to car.
You take your car in to be viewed in person by one of the dealers agents, and presto, you have sold your car and have the money in your bank account.
The real issues are is the car in the shape you stated, and will I get paid what the buyer/dealer has offered.
The dealer is out to make money, and if you want to be rid of the car and can accept the price offered, then it is a match made in car heaven.
It may be best to try and sell your car on your own first, if you have the time and patience, then use one of these services.
Now for some tips in what to do and look for when buying a car.
Chapter 8 – Tips for Buying a Car
We have covered a lot of ground in our little guide on buying a car, where to buy a car, how to finance a car, even with bad credit, the various types of cars, even how to sell a car.
However, wouldn’t it be nice to have some tips to refer to when buying a car, maybe some insider tips to aid us in making sure we buy just not the right car we want, but get the best possible car and deal we want.
These tips can be broken down into various categories, and also some tips on what to look for in mechanical terms.
Ways to Save
There are many ways to save money when buying a car, and we have discussed a few previously, but here are a few things to consider when choosing and buying a car in order to save money:
- Size of the engine: The larger the engine is the more petrol it may consume, and also the operating costs, such as road tax, can be higher. In addition, maintenance costs can be higher for some expensive and larger cars.
- Manual over automatic: Manual transmission cars are cheaper to run due to better fuel efficiency and also maintenance costs.
- Hybrids and road tax: The higher the C02 emissions a car has, the higher the road tax can be. Hybrids are cheaper to run, but the initial cost for one can be higher.
- Insurance: We discussed a lot about the cost of insurance as an additional cost of owning a car. Smaller and safer cars are cheaper to insure.
- Timing: If a dealership is looking to get rid of an end of year model as the new models are coming in, it can be a good time to get a deal on a new car.
Timing can be everything. It can be the same with a private seller. If they are paying tax and insurance on a car they wish to sell that is just sitting there, they may be more motivated to sell it, and accept a reduced offer.
What to Look For – Mechanically
One of the best tips anyone can give you when purchasing a car is to take a test drive, and put the car through its paces.
I am not saying race the engine to the red line, or drive it 100mph down a motorway, but you need to drive the car, and know what to look and feel for.
- Fluid leaks: Look under the car and ask where is the car usually parked, and look for oil or other stains from leaking fluids.
- Eye for detail: Look the car well over, and feel for rough spots in the paint or bodywork. Has it been damaged and repaired. Do the doors all line up and open and close properly. Is there any rust anywhere.
- Listen: When you start the car up, listen to the ignition, and the sounds the car makes. Does it start right up, is it loud in need of a new exhaust system, any tapping from the engine.
- Feel: When driving the car does it feel sluggish, does the steering pull to one-side, do the brakes feel spongy.
- Bounce it: Push down on the rear bumper and see how many times does the car rock up and down. If more than twice, it may require a new suspension system.
- Open the bonnet: Look the engine over, are there any newish looking parts, or again, any leaking fluids. Check the belts and hoses for leaks, and also worn spots. Hoses that are flat, or easy to flatten (careful not to burn yourself) maybe worn and in need of replacement.
- Tyres: Look the tyres over not just to see if they are still good, but are they worn more on one side, on the inside or outside of the tyre.
- Look inside: Check the upholstery and also the brake and other pedals for excessive wear. This can be a sign of heavy usage, or also if the car has low mileage, but worn pedals, car clocking.
- Gauges and features: Does the speedometer work, do all the gauges work, and also the windows, do they go up and down smoothly, do bonnet and trunk releases work.
- Take someone with you: Take someone with you who knows cars and get them to check the car out as well and get their opinion.
Any seller with nothing to hide should have no issues with you doing these things.
An HPI Check on a vehicle is an inquiry or history of a car done by a company called HPI Check. This check on any car you are considering to purchase makes sense.
You pay a small fee for this service, which can vary, and in return you get some history and very important information on the vehicle you are considering to purchase.
An HPI Check provides the following information on the car or vehicle you request the check on:
- Description of the vehicle: HPI confirms that the vehicle is listed with the DVLA, year of manufacturing, when it was first registered, and also a history of previous owners. The check also provides just a number of previous owners, not their names.
- Verify the VRM/vehicle registration mark: By verifying the VRM, the check will identify if the vehicle in question has any outstanding finance on it, if the vehicle has been “written-off” by an insurance company, if there is any police interest in the vehicle, and a VIC/Vehicle Identity Check test. Since 2015, there have been significant changes in the VIC test.
As we have previously read, many scams can involve selling cars which have financing on them, so the seller doesn’t really own the car, or the seller may sell a car that has been damaged in an accident, and possibly written-off.
- Check the car’s mileage and MOT history online: The government has set-up a way to check a car’s MOT history and also its mileage. This is along with a HPI Check, is one of the more important pieces of research you can do in preparing to buy a car.
You can click here for this information.
So here we are at the end, or is it the beginning of you now ready to go out and buy a car.