New Car Buying Tips for Numpties (By a Numpty)

Many of these tips are based on the premise that, like me, you have decided to follow the path of buying a brand new car on a PCP deal, with PCP being the type of finance deal that means you essentially only pay for the car’s depreciation over a period of 3-4 years and have a large payment at the end if you choose to keep the car. I bought a MINI, but other car brands are available. If you’re used to buying cars this way, these tips from a newbie may be obvious, but if you’re inexperienced or hate haggling (like me) then these tips will hopefully make you feel more confident of getting a good deal.

Do your Preparation

Most car brands have a car configurator tool that allows you to design your car online. These work well for the car company because all the optional extras are lucrative and a means of up-selling. Sometimes, as with MINI, there are thousands of combinations of extras that can, if you’re not careful, add 50% or more to the cost of the car. While you can’t usually order a car online from these websites, you can establish which options you want (and can afford).

There are a number of online balloon payment calculator tools which are essential preparation if you’re going down the PCP route of buying your car. These will allow you to get a feel for the monthly payments you’d incur at a certain price with a certain deposit (and, hopefully, a dealer contribution). Using the online finance quotes on the manufacturer’s website gives you some of these details but not enough to be in full control. Having in your mind that, say, a £20,000 car with a final balloon payment of £7000 after 4 years will cost you £200 per month with deposit/trade in/dealer contribution of £5000 and that the same car would cost £240 per month if the deposit was £2000 less helps you to determine how attractive your dealer’s offer is.

Look at the dealer websites in your area and consider travelling further afield if a good offer is being advertised at a particular dealer. That said, I made several trips to my dealer in the end, so you don’t want the dealer to be too far away. You could though use an offer from one dealer to extract a better offer from a more local dealer.

If you already have a car on PCP, call your finance company first to find out where you stand. How much will it cost to settle the finance? Can you voluntarily terminate? (This means you give the car back early and is a consumer protection that leaves a mark on your credit record but has no effect on your credit score). I found that voluntary termination was feasible about halfway through my loan, for example. If terminating too early, then there may be several hundred pounds to pay to get rid of the car. You’ll also need to factor in any excess mileage and any serious damage to your car (minor dents are usually ok and are classed as wear and tear). If you’re finishing your finance deal less than, say, 3/4 of the way through the loan period, you may find the negative equity on the car is too high to make part exchange worthwhile and voluntary termination is cheaper.

Having all this information will make you better informed when braving the dealership and will give you more power – there’s nothing a salesman likes more than a customer who hasn’t done their homework.

Watch out for the Added Extras

The On the Road price of your car usually includes vehicle registration, a small amount of fuel, vehicle tax and delivery from the factory to the dealer. There are however additional fees that can soon add up.

Servicing packages can be worthwhile but their value can depend on servicing intervals etc. If you’re only likely to keep the car for 2 years, then paying for servicing over the four years may not be worthwhile.

Paint/upholstery protection – this adds another layer of protection against stains, damage etc to your car. Again, this may or may not be worthwhile.

Gap Insurance – this is an insurance package to protect you against serious debt if you write off your car. While your comprehensive car insurance will pay out, it generally tends to pay what the car is worth, not what you paid (or what you owe the finance company). Given that a car depreciates by a significant sum as soon as you drive off the dealership’s premises, you may get a few thousand pounds less than you owe to the finance company and so may not be able to afford a brand new car. In my experience, the dealer’s gap insurance is far more expensive than you can get online but it is seriously worth considering for peace of mind – it was about £250 online versus £500 from the dealer when I bought my car. You don’t have to buy it straight away but do need to within 60 days of purchase.

Tyre/windscreen/dent insurance – another added extra that can add to your up-front costs, these packages protect you against tyre replacement and the like. Again it’s all about how much risk you’re willing to take that you won’t need to replace your tyres etc.

After the Deal is Done

So what happens after you’ve signed your life away for 4 more years of debt?

Depending on whether you bought a new car that is part of the manufacturer’s pre-built stock (either a car to your desired specification at another dealer or in a national storage compound) or had it built from scratch, your car could take anything from a week to 3 months to arrive. The delay may possibly be longer if your car is being manufactured in another continent and has to be shipped – most UK cars are built somewhere in Europe though.

If your car is being manufactured, then you’ll receive various updates from the manufacturer as it proceeds through the production process. If it’s being built in a factory outside the UK, be prepared for a frustrating wait after the car is built as it then needs to be transported to an export terminal, shipped to the UK and then transported again to a national distribution centre. It’s unlikely to come straight to you from its port of entry. My car took nearly 2 frustrating weeks to arrive at the dealer after arriving in the UK (some MINIs are built in the Netherlands). That does though allow time to sign finance, dirt out insurance and give details for your car’s registration with the DVLA.

If you’re handing your old car back to the finance company, you will need to arrange that paperwork and there may be an overlap when you have two cars if you don’t want to be left without a car – it is not done by the dealership. That then may be an issue for insurance – if you’re happy with your car insurer, organising multi-car insurance to cover you across the overlap will be easier. If you want to change insurers, then be wary of your No Claims Discount – you can’t have that applying to two cars at the same time with different insurers. If you’re lucky, the car dealer will offer you free short-term insurance for your new car. If not, they will obviously need to see your insurance certificate before giving you your new car.

And that is it – enjoy your new car! Don’t be daunted, it is actually a (mostly) enjoyable experience and the preparation will make it far easier and more satisfying.

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