New year, new car?
Are you thinking about buying your very first car, upgrading to something a little faster or switching to an electric vehicle in 2021?
Buying a new car is a big decision and there are a lot of things that you will need to consider before taking the plunge.
It’s important that you don’t rush into anything. Take the time to find out about all your options from financing to engine size and fuel efficiency to motor tax.
If you’re unsure where to start on your car search, don’t worry. The whole process can make your head spin but we have come up with a list of five questions that you should ask yourself to make the decision easier.
Do your research, ask yourself these questions and enjoy searching for your perfect motor!
1. What kind of car do I need?
While it might be tempting to test drive a Range Rover or research slick BMWs, if these cars do not meet your needs (and budget) then don’t get too carried away. Think about what kind of car you need. Do you travel long distances? Do you need five doors? Would you like ample boot space?
Write down a list of things that you absolutely must have. These can be called your non-negotiables. This list will help you to make a clear and informed decision once the shopping starts. The last thing you want is a new vehicle that doesn’t suit your lifestyle.
2. How much do I want to spend?
Your choice of new car will largely depend on your budget. Think about how much you can afford to pay and how you would like to repay it. There are two main options to consider.
1. Personal Loan
The simplest way you can finance a new car is by getting a personal loan from your bank or credit union. You can typically take out this type of loan with repayment terms ranging from three to five years and you can borrow the amount you want to pay for the car or make up any shortfall in savings or your current car's trade-in value.
2. Personal Contract Purchase (PCP)
PCP or Personal Contract Plan finance on the other hand is a lease scheme. With a PCP you hire the car for a period of time, usually between three and five years. At the end of the PCP agreement, you’ll have a large final payment to make (a balloon payment) in order to own the car. This balloon payment is also known as the Guaranteed Minimum Future Value (GMFV). Your GMFV will be calculated with your annual mileage in mind.
Remember to also factor in things like car insurance and motor tax into your budget too.
3. Is going green worth it?
Electric vehicles are a hot topic at the moment and it’s not hard to see why. They provide a wonderful alternative to petrol or diesel motors and many of the downsides that plagued earlier models have since been eliminated.
While the range of early EVS was typically 100km, most new EVs have over 300km range with some tipping the 500km mark. You can also save up to 80pc annually on fuel costs by switching to electric vehicles so don’t forget to factor that in too.
Yes, electric vehicles are a little bit pricey up front, but there are some very generous government grants available, of up to £3,000. Once you’ve chosen your perfect make and model, the dealer will include the value of the grant in the vehicles price.
4. Do I want a new or used car?
Ask yourself if you are planning to keep the car for over eight years, or if you just need a car for two to four years. You can find great used cars that have great value and are still under the manufacturer’s warranty.
If you’re buying a used vehicle, look for a dealer who’s been in the business for a long time and who will stand behind the car. Ask them plenty of questions and don’t be shy. Find out if the car is under finance (money is still owed on the vehicle) or if the car was written off by an insurance company.
A large majority of used cars no longer have a factory warranty and if something goes wrong with the car, you need a business that is reliable and can help you to service the vehicle.
5. How is Brexit affecting the car market?
Brexit has affected almost every single industry in the UK and the car market is no different. Thankfully, it’s not all doom and gloom.
According to recent reports, Northern Ireland car dealers will be able to sell second hand vehicles sourced in Britain across the border without any extra charges. However this only applies if they are "properly imported" across the Irish Sea.
Dealers have also been assured that VAT will now not be applied to the purchase price of vehicles moved from GB to NI. It was feared that Brexit-related changes would mean it would be more expensive for NI car dealers to source second-hand vehicles from GB. Before you start searching online or contact a dealer you need to make sure that you have fully done your homework and answered the four questions above. Now comes the fun part, negotiating.
As with negotiating your salary, negotiating your car price is all largely about doing your research and putting in the work. If you start your search armed with knowledge, reviews and a clear idea of exactly what you’re looking for, you are much more likely to succeed.
With a Credit Union car loan you’ll own the car from the outset. There are no scary hidden fees, additional charges or balloon payments. Credit Union. Imagine more. Make a car loan enquiry online today.