How to Save Money When Buying a Vehicle

It is no secret that buying a vehicle can be an extremely expensive process. Not only do you have to actually physically purchase the vehicle, you always have to think about other expenses like insurance and maintenance. Whilst it is the case that it is going to be expensive, there is no reason why you cannot save money in the process. Here are some tips as to how you can save money in the process of buying a vehicle.

There are many reasons why people seek to purchase a new vehicle. However, for many, they simply cannot spend the money required on a brand-new car and there are also many people who are unable to commit to a lease or hire purchase agreement to get a vehicle, unable to plan the required payments in advance. This includes contract and freelance workers who do not have regular employment (source: Transparent Umbrella Company).

Looking at used car dealership
Image Credit: RL/Flickr

Do You Really Need a New Car?

Well, of course, you are looking for a new car, but do you need a new one or could you do with a used car?

Buying a completely new car, straight from the factory is not really going to save you heaps of money, but opting for a used car could well do. This used car doesn’t necessarily have to be battered and bruised, you can find used cars which are in tip top condition for a fraction of the price of a used one.

Additionally, if you are looking to save up for a brand-new car, you may need to cut back on additional and sometimes unnecessary expenses in your life for a period of time. Although this may mean living a little bit healthier by not buying as much ‘luxury’ and junk food, it is likely to require quite a bit of tightening of your financial belt (source: Presscription Juices).

Statistically, a car will lose almost half of its retail value in the first three years and some lose their value even earlier than this. That is a large amount to lose on such an expensive purchase. A car which is one or two years old or even an ex-demo car is typically far better in value than a brand-new car.

For example, a new Fiat Panda will cost you around £11,245 whereas the value will drop to about £3,000 after just three years. That means the reaming percentage of its value is 26.7%. Another example would be a Skoda Rapid priced at £21,970 but only maintain 26% of its value after three years at £5,675.

Pick Models Which Hold Their Value

If you do decide to go for a new car, it is important to do your research into which models hold their value best. One of the biggest problems when buying a new car is that they will lose their value too quickly. However, there are certain models which shed their value quicker or slower than others. If they lose value quicker, obviously you will get a lot less when it comes to selling it.

Cost-effective car

The Cheapest Cars to Run

In a similar fashion, you should dedicate some time to do some research to see what cars are ultimately the cheapest to run as this will be an ongoing cost. So here are some things to keep in mind:

Smaller Engines – Cars with smaller engines can be cheaper since a large engine will typically burn more fuel than a smaller one will. Therefore, the size of the engine is vital if you are concerned about fuel economy. But of course, it does depend on how you use your car. A small engine is ideal if you are using your car just for local trips mainly. If you are doing regular long trips or driving at high speed a lot, a smaller engine will actually burn more fuel in order to keep up.

Petrol is Cheaper than Diesel – Generally, cars which use petrol tend to be cheaper than those which take diesel. You may hear that diesel engines are more economical than petrol engines, and this would be true. However, do not be fooled into believing that a diesel engine is a better option. The diesel cars in general are substantially more expensive to purchase and the fuel usually costs more money.

Manual Cars are Cheaper than Automatic Cars – In the UK, automatic cars are not actually more popular than manual cars, so the effort of switching gears is definitely worth saving that extra money. Yes, automatic cars might take some of the hassle out of driving, but they come with a much higher price tag.

Smaller Cars are Cheaper to Insure

If you are not someone who is in need of a big vehicle, then you may want to get a smaller car to save some money. Not only do you have to purchase the car, you need to keep paying for the insurance as a matter of legality if you want to drive it at all.

To put it simply, it will be costly to insure a 4×4 over a small city car like a Fiat. You can check the insurance group that a model you are considering falls into through the Motor Insurance Repair Research Centre. They base their groupings on things like performance, safety features, price of a new model and how much parts would be to replace. The higher the number (1-50), the bigger your premium is likely to be.