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Buying a car – economically
If you’re one of the people who took out a bank loan to buy a Footballers’ Wives-style SUV, only to find the cost of fuelling it absolutely horrific, or who fell for a cute retro-look city car such as the Fiat 500 or reborn Mini but found the cramped rear seats and lack of load space difficult to deal with, then next time around you may like to spend your car loan on a more rational purchase.
All too often, we buy cars on an emotional whim – because they bear a prestigious brand-name, perhaps, because they’re the latest fashionable urban accessory, or maybe simply because we’ve spotted them for sale on a local forecourt and liked the look of them.
A car is one of the most expensive things that many people will ever buy, second only to their home. So it makes sense to do your research carefully and avoid giving in to a whim before taking out that unsecured loan.
Cost it out
Whether you’re buying new or second-hand, work out your budget for the purchase – and stick to it. Then work out how much you can afford to spend each month on running the car, including fuel costs and monthly repayments if you’re taking out a car loan. Take into account insurance, as well as the cost of a tax disc. The government’s Directgov website clearly explains the different bands for Vehicle Excise Duty (VED), which is based on a car’s carbon dioxide emissions. If you’re likely to be driving into central London frequently, you may wish to seek out a car that emits less than 100g/km of carbon dioxide – not only will this fall into the free Band A for VED, it will be exempt from the £8-a-day congestion charge.
There are a number of excellent online resources with plenty of data on running costs and even cost-per-mile figures for each make and model of new car on sale; check out websites such as www.whatcar.com and www.carbuyer.co.uk. www.parkers.co.uk has data for both new and used cars. Pay attention to the term ‘depreciation’ as this refers to a car’s loss in value as it gets older, and this will be the biggest single cost to you if you’re buying a brand new car.
Choose with care
It’s easy to get side-tracked by appealing details such as clever gadgets or striking styling, but even if you’ve set your heart on a car from a particular manufacturer, you must make sure that it will suit your day-to-day needs and your lifestyle. Take as long a test-drive as you can to ensure that you will be comfortable in it, fold down all the seats and check whether it will have enough space, and load in your kids and any child seats, buggies or other equipment you’ll be needing to carry. You may be surprised at the cargo capacity of many modern small vehicles – thanks to smart sliding, folding or pivoting seats and wide-opening or sliding side doors, they can be very practical and versatile.
If you only occasionally need to carry large quantities of stuff – when going on holiday, for example – then consider a small car on which you can fit removable roof bars, cycle racks or roof boxes. Today’s accessories fit on securely, safely and even aerodynamically, with manufacturers offering purpose-designed cargo solutions.
You’ll also need to decide between petrol and diesel; though diesel cars usually return more miles to the gallon, petrol cars tend to be cheaper overall for all but the highest-mileage drivers, due to the higher cost of diesel fuel, dearer purchase prices and more expensive servicing. Do your research on the makes and models you’re interested in, however, as this does vary. There is a growing choice of hybrid models (petrol-electric or diesel-electric) such as the Toyota Prius or Honda Insight, but again, do your sums; all-electric cars will only suit those with access to recharging facilities and who do a low daily mileage.
Though dealers will offer car finance, shop around for your car loan if you need one – an unsecured loan, or any bank loan may also help you to spread the cost of the car. Before you apply for a car loan, it’s a good idea to use a loan calculator to know how much you would pay monthly.
Issued by Barclays
This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.
Barclays is a major global financial services provider engaged in retail banking (bank accounts and instant access savings accounts), credit cards, corporate banking, investment banking, wealth management and investment management services, with an extensive international presence in Europe, the Americas, Africa and Asia. With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs over 140,000 people. Barclays moves, invests and protects money and provides ISAs, home insurance, life insurance, a mortgage calculator, guides on how to buy shares and other services for over 49 million customers and clients worldwide. For further information about Barclays, please visit our website www.barclays.co.uk.
- Paul Clarke