First time car buyer - advice appreciated!

silverdream · 14 July 2017 at 1:31AM

Hi all,

I'm hoping to pass my driving test in the next few months so have been looking at my options for purchasing a car.

I was thinking of spending ~£5k on a used car. I currently have this in savings but if I use this towards a car this will literally wipe out my savings and I will have no 'rainy day' money. Is this advisable?

I know that other options include credit cards, loans and dealer finance (not 100% sure how this works so would appreciate an explanation for the absolute beginner!). Which of these options tend to be best or are the most commonly used?

Insurance is another consideration as I am not yet 25 so this is bound to be a hefty monthly payment.

Appreciate any thoughts on how best to approach this

Richard53 · 14 July 2017 at 2:33AM

A car at that price will need some work doing from time to time. Don't spend the whole £5k on the car, but perhaps spend £4k and have an emergency fund of £1000 for when it 'fails to proceed'. Peace of mind. There isn't a huge difference between a £4k car and a £5k car if you buy wisely.

I have a long-standing dislike of debt in any form, so I would say pay cash and put money you were thinking of paying monthly on a loan into your insurance, and perhaps into a savings account for maintenance, tyres, MoT repairs, eventual replacement and so on.

If it is your first car, please check what the manufacturer's recommendations are for routine servicing, and carry them out. This will probably mean an annual service at the least. Yes, it costs money, but there is no better way of ensuring the reliability and long life of a car.

Good luck and have fun with it.

ETA: also, spend a bit of time asking people for recommendations for a good, honest local garage. With a car of that age, you won't be using a main dealer, and you should avoid chains like Kwik-Fit for things like routine servicing and repairs if at all possible. A good local mechanic with oil under his fingernails and a busy operation is worth his weight in gold if you are not able to do your own mechanical work.

bengalknights · 14 July 2017 at 9:58AM

You could give bangernomics ago that way if you damage it you wont really care and your savings will still be intact

silverdream · 14 July 2017 at 2:09PM

Thank you for your advice! Is insurance significantly more expensive to pay monthly than it is to pay annually? Definitely agree a local mechanic with a good reputation is a must.

neilmcl · 14 July 2017 at 2:36PM

silverdream wrote: »

Thank you for your advice! Is insurance significantly more expensive to pay monthly than it is to pay annually? Definitely agree a local mechanic with a good reputation is a must.

Strictly speaking there's no such thing as "monthly" car insurance, unless you're talking about temporary insurance, it's simply an annual policy where you have the choice to pay in one lump sum or to essentially take out credit to pay for the policy and you repay this plus interest on a monthly basis. Clearly the latter is the more expensive option because you have that interest element to pay as well.

andrewf75 · 14 July 2017 at 4:59PM

Always a good idea to hold some savings back, but equally no need to go to the extreme of bangernomics if you have 5k in the bank. You can get very decent cars for 2-3k so have a look around. But no-one can really advise - it depends how much you want a more expensive car v how much you want to keep some savings! You're not reliant on finance though, thats the main thing. A lot of people have no choice.

khcomp · 14 July 2017 at 5:01PM

Hi;
Firstly, it's perfectly possible to buy an utterly reliable car for £1,000 or less: You just need someone who knows what they're doing to find you one. There is absolutely no guarantee that a £4-5,000 car will require any more maintenance than a £4-500 one, even from a dealer.
As has been said, find a good, local, independent, trusted garage or mechanic - ask friends and family - and use them. They may well be able to advise on a car too.
As you're young and a new driver, there's a good chance that your insurance will be a large part of your running costs: I suggest that you wait until you pass, find a car that suits you and get some quotes: This may be the deciding factor on what car you can afford; bear in mind that older, cheaper cars can be more expensive to insure than similar newer models. Make sure you also consider maintenance costs, fuel economy, road tax etc.
Most insurers will allow you to pay your insurance premium by monthly instalments, but most will charge quite a lot for the privilege of doing so. Insurance comparison websites will usually show annual price, and total cost if paid monthly.

silverdream · 14 July 2017 at 8:10PM

neilmcl wrote: »

Strictly speaking there's no such thing as "monthly" car insurance, unless you're talking about temporary insurance, it's simply an annual policy where you have the choice to pay in one lump sum or to essentially take out credit to pay for the policy and you repay this plus interest on a monthly basis. Clearly the latter is the more expensive option because you have that interest element to pay as well.

So could you put this one lump sum on a 0% credit card and pay it monthly that way? Or is that not allowed?

andrewf75 wrote: »

Always a good idea to hold some savings back, but equally no need to go to the extreme of bangernomics if you have 5k in the bank. You can get very decent cars for 2-3k so have a look around. But no-one can really advise - it depends how much you want a more expensive car v how much you want to keep some savings! You're not reliant on finance though, thats the main thing. A lot of people have no choice.

Thank you

If it has four wheels, a steering wheel and is safe then I'm happy!

khcomp wrote: »

Hi;
Firstly, it's perfectly possible to buy an utterly reliable car for £1,000 or less: You just need someone who knows what they're doing to find you one. There is absolutely no guarantee that a £4-5,000 car will require any more maintenance than a £4-500 one, even from a dealer.
As has been said, find a good, local, independent, trusted garage or mechanic - ask friends and family - and use them. They may well be able to advise on a car too.
As you're young and a new driver, there's a good chance that your insurance will be a large part of your running costs: I suggest that you wait until you pass, find a car that suits you and get some quotes: This may be the deciding factor on what car you can afford; bear in mind that older, cheaper cars can be more expensive to insure than similar newer models. Make sure you also consider maintenance costs, fuel economy, road tax etc.
Most insurers will allow you to pay your insurance premium by monthly instalments, but most will charge quite a lot for the privilege of doing so. Insurance comparison websites will usually show annual price, and total cost if paid monthly.

Good points, thank you

neilmcl · 14 July 2017 at 8:25PM

silverdream wrote: »

So could you put this one lump sum on a 0% credit card and pay it monthly that way? Or is that not allowed?

Yes, do this.

Alice_Holt · 14 July 2017 at 8:30PM

Good idea to involve friends and family.
Anyone you know thinking about changing their car?
If a car with a good history can be passed on to you from a family member etc that could well be the best option.

I certainty wouldn't spend all your savings. Many cars for sale at £4k ish will need money spent on them (probably one reason that the previous owner has decided to sell).
Perfectly possible to find a £1k car that isn't a money pit - just needs patience and some degree of luck.

System · 14 July 2017 at 9:59PM

DO NOT UNDER ANY CIRCUMSTANCES GET YOURSELF INTO DEBT TO BUY A CAR. It just isn't worth it. The 0% route is not a bad idea and technically you're not adding debt as long as you maintain the savings to cover it, in fact it is a wise option to use because your £5k that you would have spent in one go will be sat there in the bank gaining interest, effectively saving you money over the period of the 0% deal.

Failing the 0% route another way to look at it is because you won't have the millstone of debt repayments around your neck if you buy cash then you'll be able to rebuild your stash quite quickly.

Many cars for sale at £4k ish will need money spent on them

But that applies to any car of any amount. There is no magic figure that means you're guaranteed not to have to spend money on them especially given that things like tyres, brakes and clutches wear out just by the vehicle moving from one point to another. Unless you are buying a car with a manufacturers warranty on then there is a chance you'll be paying for repairs and even with that warranty you're going to be paying out for at least a couple of sets of tyres and a set of brake pads and discs.

First time car buyer - advice appreciated!

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