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If you are looking to purchase a new car, whether it is used or brand new, there are going to be a variety of different costs involved. Of course, there are going to be costs to maintain the car, such as fuel, insurance policies, breakdown cover and garage visits, but this article provides insights into the costs involved in the purchasing process, to help you make your decision.
Used cars
When purchasing a used car, there are likely going to be some additional costs involved. Firstly, many people will spare the expense to get the car looked at by a professional, or service the car. This will let you know if there is anything significantly wrong with the vehicle before investing your money, and provide you with a chance to negotiate a lower price if there are any problems.
With many used car dealerships, there are also a variety of administration fees that come with purchasing a used car, which can often come as a nasty surprise if you’re not prepared. Some dealerships will advertise a price on the vehicle sticker, but add administration fees when it comes to processing the sale, which can range from £30 – £400. You must enquire from the start, so you can factor it into your costs and your decisions. The last thing you want to do is maximize your budget with the perfect vehicle, then have to find another one to incorporate the administration fees.
It is important, however, to ensure that the dealership is operating fairly with any additional charges such as administration fees, as they must adhere to the Consumer Protection from Unfair Trading Regulations 2008, which protects consumers against unfair and misleading information.
New cars
When buying a new car, you are often presented with a variety of choices, for example, purchase in full with cash, or purchase on a lease or with finance. When you purchase with cash, you are typically paying for the value of the car, plus taxes and any uplift the company has put on the vehicle to fund the business.
When financing a car, you agree to pay the costs of the vehicle over some time. Typically, this is between 3-5 years. Financing acts like a loan, so the amount of money that you will have to pay will entirely depend on the deposit that you pay upfront, the value of the vehicle as deemed by the company selling it and the market, how long you choose to pay the loan over, and what the interest rate is of the finance. Interest rates that you will pay will also depend on the market, as well as the third party loan company that the dealership partners with. Interest rates can vary between 5%-20%. It tends to be higher on used vehicles, and lower on new vehicles, to aid in the promotion and movement of new cars on the market. Some people choose to go directly to the bank for a loan, as they offer cheaper interest rates and will save you money.
When you choose to lease a car, you are not guaranteed the car at the end of the agreement, although many dealerships do provide you with a chance to purchase the car at the end if you wish. There is a calculation that the dealership uses to work out how much you should pay for the vehicle every month, based on the value of the car, and the current market. There is often a deposit that needs to be paid too, in case the vehicle is damaged in your care.
If you are going to make a comparison between dealerships for price points, then make sure you have worked out the value of the cars, the down payment, and the terms of the agreements. As some may look cheaper, but in fact, will cost you more if not calculated correctly.
Unlike a used car, you may not get a specialised look at the vehicle if it is brand new. Just make sure that the new vehicles you are considering come with the necessary paperwork to show it has passed checks, health and safety, and inspections.
Personalisations
When you are buying a new car, additional costs may come into play if you choose to personalise the vehicle. You may choose a different colour, additional internal functions, the type of wheels, a different sized engine, light enhancements, window tinting, floor mats and seat covers, audio equipment, personalised plates, and much more. Upgrading, and personalising your car can be a fun way to make it your own, but you will need an additional budget to do so as most of the customisation will come with an additional cost.
If you are thinking about purchasing a car, you must figure out what budget you have to spend, and the different costs you will have to consider. This can make the experience much more efficient, and hassle-free.
