Car buyer's guide

Buying a car - whether brand new or second hand - can be an exciting experience, or it can fill you with dread, depending on how prepared you are. So swat up and arm yourself with solid, financially-based information.

How to drive a bargain when you're buying a car

Buying a car - whether brand new or second hand - can be an exciting experience, or it can fill you with dread, depending on how prepared you are. So swat up and arm yourself with solid, financially-based information.

Set a budget

Decide what you're willing to spend and stick to it. You'll also need to factor in dealer charges, vehicle registration, running costs, insurance, as well as interest if you're taking out a loan.

Loans

When considering your loan, do a quick calculation to work out how much interest you'll be paying over the loan period to make sure you can afford it. Do your research and find out what interest rate you should be paying for the loan you wish to take out. If you're buying your car from a dealer, know the best rate before they try and sell you a loan.

Insurance

Your age, personal situation and your type of car will all affect your insurance premium. So get a quote using the details of the car you have your eye on to see exactly how much it will cost you, and factor this into your budget. You should consider comprehensive car insurance, which includes third-party insurance, from a trusted insurer to benefit from added cover.

Tax

Your car must have a valid tax disc displayed at all times. If you've bought from a dealer they should have sorted this for you before you drove it away. If you've bought a used car, it's your responsibility to check that its tax disc is valid. Directgov has information on how apply for a tax disc online or by phone.

Vehicle Excise Duty (VED)

In 2001 the Government introduced reforms to VED, the principle behind the system being that 'the less a car pollutes, the less you pay'. The most recent VED information is available at the Driver and Vehicle Licensing Agency (DVLA), so it might be worth checking how much you’ll be charged for your new car.

The RAC argues that engines powered by diesel generally produce less CO2 but more air pollutants than their petrol counterparts. However, diesel cars may only prove cost-effective if you're covering considerable miles each year.

Data about each car's environmental impact is now obtainable either through the vendor or online at www.vcacarfueldata.org.uk.

Registration

The seller will usually notify the DVLA that you've bought your new vehicle. How the vehicle is registered to you will depend if it is new or used, if a registration document or certificate is available, or you may register it yourself.

Servicing

For cars more than three years old, you need an up-to-date MOT certificate to drive. The RAC advises that when buying a car through a dealer, private sale or auction, always check the car's log book or registration document to validate ownership, accuracy of age and mileage. Don't rely on the MOT as evidence of a car's condition.

To check for yourself, look for signs of rust and paint bubbles and check the paintwork is consistent all over - are the body panels consistent or is there evidence of repaired accident damage? Check all the electrical elements in the car from headlights and dashboard warning lights, to the stereo if it's fitted. Check the engine for any oil or coolant leaks and make sure it's clean, and if the engine's reconditioned, ask for a bill or warranty that proves the work. Also check the tyres for tread, pressure and to make sure there's no damage.

Test drive

Always take the car for a test drive and take the time to test the car properly, especially steering, brakes and clutch. Take a knowledgeable friend with you to point out anything unusual about how it drives. Moneysupermarket.com also offers vehicle history checks online.

Go online and do your research

There are thousands of car company websites where you can compare models, and buy and sell new and used cars online, for example: Auto Trader UK, Broadspeed.com and Autoquake.com, buyacar.co.uk and drivethedeal.com.

These sites are also useful for comparing new and used cars and deciding which is better value for you.

Collette Walsh from Moneysupermarket.com explains, with fewer overheads and no commission to pay to salesmen, there can be considerable savings to be made if you buy online. Even if you don't buy online, you can arm yourself with quotes and challenge the dealer to make the online price. Some sites also list the invoice price - the amount the dealer paid to the manufacturer - so if you know what this is you can use it as leverage to drive the dealer's price down.

Be prepared to haggle

If you go direct to dealer, ask for the total drive-away cost to avoid hidden charges and help you make an accurate comparison. Let them know of competitors' prices and be prepared to walk away at any time during the deal. When you're ready, make a starting offer below the drive-away price.

It may be a good idea to visit the dealership in person rather than trying to get the price down over the phone, and be prepared to ask for add-ons if dealers are reluctant to dropping the price further. Going straight to the manager can cut down on negotiation time.

Steven Baillie, Head of Sainsbury's Loans, says: "It's important buyers remember to haggle when negotiating any car purchase, as haggling can save the buyer hundreds or even thousands of pounds. Homework is the key here; if you know what you should be paying you'll be able to haggle more effectively."

Trade-ins
Sainsbury's Finance also urges people planning to sell their cars to make sure they know the potential value of their vehicle. Steven says: "Sellers should have an accurate price in mind based on the car's market value which includes taking into account the mileage, wear and tear and any extras or special edition components."

If you have a car to trade in, presentation of your used car is paramount but you must also be upfront about your car's history so keep service books and receipts for maintenance and repairs so the valuer can quickly check the car's history.