Buying a new car is both exciting and frightening in equal measures.
It should be thrilling because you’re choosing one of the most expensive things any of us ever buys. But it’s a tad scary because… well, you’re spending an awful lot of money and you have to live with the consequences of your decisions for years afterwards. So before drivers sign on the dotted line, what questions should they ask, both to themselves and the sales person they’re dealing with?
Do you know enough about the car to live with it?
There are the obvious questions to ask such as does it have enough seats or boot space for your requirements. You can find answers to these with a bit of research online. However there are things you won’t know unless you’ve spent time with the car.
Sports suspension and larger wheels might make the car look slinky but you may quickly tire of the hard unforgiving ride that they give the car. And a test drive round the block won’t tell you if the seats give you backache on long journeys.
TIP: If you’re serious about buying a car, ask for a 24-hour test drive. Then take the car on a proper trip. That way you can get a good idea of how comfortable the seats really are, whether or not friends and family can fit in comfortably, what the fuel economy is like and whether there’s anything that’s likely to drive you mad over time.
"Depreciation is actually the biggest running cost. Over a three-year period it can total three times what the average driver spends on fuel"
Can you afford the running costs?
What you pay for a car is only part of the story. Once you’ve got a good idea of which make and model of car you’d like to buy, check how expensive it will be to run – because the last thing anyone needs to be saddled with is a car that eats through their monthly living allowance. Fortunately, finding out a car’s likely running costs is even easier than filling it with fuel.
An easy way to understand how expensive a used car will be to live with is to use a free tool from the likes of The Money Advice Service. It can fairly accurately predict the yearly costs for fuel, insurance, road tax, servicing and the biggest cost of all, depreciation – the amount of money a car falls in value (see below).
How much money will the car lose?
Every car loses value the moment it drives out of the dealership. However, that depreciation varies from car to car. Philip Nothard, a used car valuation expert from CAP Automotive explains: “People forget that on a new car, depreciation is actually the biggest running cost. Over a three-year period it can total three times what the average driver spends on fuel.”
TIP: You might think depreciation isn’t important on cars bought on finance. It is. The size of your monthly repayment is directly proportional to how much money you’ve borrowed and how much the car depreciates.
What will the real total monthly cost be?
We’re not finished with costs yet. Anyone who buys a car on finance – and the majority of us do, according to the Finance & Leasing Association – is advised to take out Guaranteed Asset Protection (GAP) cover.
Effectively an insurance policy, it covers the difference between how much an insurer will pay out if your car is declared a write-off after an accident, and the cost of replacing it. Without it, drivers could end up with no car and owing the finance company money.
Buyers should also factor in the car’s Guaranteed Future Value, or Balloon Payment. This is what you pay at the end of the finance period to own the car. Alternatively, if you want to take out more finance to buy a new car, you’ll need to find cash for a deposit.
How long will it take for the car to be delivered?
The majority of new cars are built to order. Along the way, there can be frustrating delays. That means drivers may have to wait up to six months to take delivery of their pride and joy, even if it’s a mainstream motor. Therefore it’s wise that anyone who will be part exchanging their existing car for the new model ensures the price is agreed up front with the dealer, and not several months later.
TIP: If you are selling your existing car privately, don’t do so unless you have proof your new motor is at the dealership or you could be caught short and left without wheels.