Buying a Car

Buying a car can be a large upfront cost, and  second hand can be a great alternative - but it comes with a number of other considerations that we will discuss later in this article. Here are some things to keep in mind before your big purchase:

• Know your budget. Think about how much you can afford to spend each month and how much you can pay up front.

• …and your credit score. Having a good credit score can help you secure the best financing and cashback deal when buying a new car.

• Think about finance and running costs. Some to keep in mind are monthly payments, interest charges and deposits, as well as insurance, fuel consumption, servicing, and maintenance costs.

• Decide if you’re buying a new or a used car. The former comes with a warranty and personalised features whereas the latter is cheaper and retains its value better.

• Do your research. Read press and customer reviews to find out more about the vehicle you’re interested in, checking its different features and tech. Also, compare prices for similar cars to find the best option for you.

• Sustainability. What will the car be used for? Think about the driving conditions of the journeys you’ll make to pick the right engine size and decide on the necessary features.

Buying a new car has multiple advantages; you know its history and can customise it to your tastes. Plus, it’s less likely to need repairs than an older vehicle and under the current legislation it doesn’t need a MOT (Ministry of Transport) test for the first three years.

Here is a possible timeline you can follow, from test drive to collecting your new vehicle:

• Book a test drive. To find out more about the car and if it’s suitable for you, contact the dealer to arrange a viewing and a test drive. When you test drive, remember to thoroughly inspect the vehicle to check comfort and visibility or flag any potential problems.

• Agree the purchase price and deposit amount. Be sure to focus on interest rate, length of contract and all other necessary payments and fees.

• Carefully read the terms and conditions of your purchase. Before signing any important documents, make sure you understand all the details and ask any potential questions. Double check the payment dates to ensure there are no errors.

• Check how long the manufacturer warranty is. Further, check if the dealer offers an additional one. Also ask what features are standard or can be added.

• If possible, trade-in your old car. This can make buying your new one less expensive.

• Arrange the details of your collection day. Make sure you have car insurance and pay your balance.

Found your perfect vehicle? Keep your budget in mind and ensure your finances are in order. Here are a few different ways to fund your purchase:

• Cash. Have enough savings? Use it to own a new or used car outright and avoid interest and charges. Make sure you don’t use all your savings – it’s important to keep an emergency fund.

• Credit card. You can consider using a credit card, this could be your American Express® Card if you have one, to earn reward points or cashback, on the condition that you pay off your balance in full when your statement comes. Be cautious with this option – and ensure you are confident that you can make the monthly payments and that you are familiar with your credit card provider's APR rates and T&Cs. Representative Card: The American Express® Preferred Rewards Gold Credit Card ARP 88.8% APR variable.

• Personal loan. Compare available deals and their interest rates to understand if this is the right option for you.

• Hire purchase plans. These give you the opportunity to pay an initial deposit and then make a series of monthly payments, allowing you to buy a car with your last instalment.

• Personal contract purchase. This would enable you to pay a deposit and then make monthly repayments for a few years. When your agreement ends you have various options, such as making a balloon payment to purchase the car outright or giving it back to the dealer, paying nothing.

• Conditional sale. This is similar to hire purchase plan but usually has higher monthly payments and doesn’t include a fee at the end of the agreement.