One of the big advantages of buying a new car is that you can choose exactly the colour scheme and finish that you like best. Owners of brand new cars also benefit from the full warranty package and the peace of mind of knowing that there is no unknown history to worry about. And motorists keen to take advantage of the latest developments in fuel efficiency and safety will prefer new makes and models due to their advanced features and technology. The big downside, however, is that around 20% of a new car's value is lost as soon as it leaves the showroom, and few new cars are worth more than half their purchase price after just three years. If you do decide to buy a brand new vehicle, you therefore need to think carefully about how to get the best deal. Although many dealerships provide attractive finance packages that come with extras such as free insurance, you should always compare the overall cost of taking out a cheap personal loan and shopping around for the best insurance deal before signing up. Other finance options worth looking into include hire purchase (HP) plans that require you to put down an upfront deposit and commit to a set amount of monthly instalments, and leasing agreements with which you pay a monthly fee to use a car for an agreed period and number of miles. Just remember to check the terms and conditions carefully for penalties and extra charges.
For many budget-conscious motorists, a used car that is in good condition without too many miles on the clock is the perfect compromise. After all, you can pick up a three-year old car for a fraction of the price it cost new. The bad news, however, is that – even with ever-longer factory warranties – unless you know the “one careful owner” personally, there is always a question mark over a car’s history. Ways to reduce the risk factor include splashing out on a nearly new car from a dealer's demonstration fleet, paying a bit more for a car from a manufacturer-approved used scheme, and buying from a reputable dealer who you can go back to should something go wrong. Many used car dealers also offer competitive finance packages that allow you to spread the cost over time – although once again a low-rate personal loan or a 0% credit card that allows you to pay off your debt over, say, two years without incurring any interest at all could prove an even cheaper way to fund the purchase. Unfortunately, though, buying from a private individual is almost always the best way to bag a real bargain. Just be sure to protect yourself by checking for issues such as “clocking” (tampering with the recorded mileage), and by carrying out an HPI check that will tell you if there are any problems such as unpaid finance agreements or accidents in the vehicle’s past. Earlier this month Citizens Advice teamed up with Trading Standards to launch the Check it, Don’t regret it! campaign, aimed at those buying second hand. You can read more about the initiative here.