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Car enthusiasts keen to show the world they have the latest model will be heading to the forecourts this weekend to coincide with the release of new plates on September 1. All new cars registered in the month will bear the number "68".
Beautiful bodywork may be a siren call to eager drivers, but it is important to research what you want beforehand or you can find yourself at the mercy of commission-hungry salespeople, relying on what suits them rather than you.
This is especially the case when buying a car via a personal contract purchase (PCP), the way 2.3 million used cars and 0.9 million new ones were bought last year, according to figures from Which? PCP can be a useful tool to get your hands on the car you want, but the terms and conditions can be tricky and could leave you severely out of pocket.
Telegraph Money asked Graham Hill, independent car finance expert at GHA Finance, for an insider’s guide on how to avoid the car salesperson’s tricks and traps. Here are his top five tips.
1. Beware the last-minute extras
You’d think they’d be happy to have just sold you a car, but when the final forms are being printed and signed, dealers will attempt to upsell you a hodgepodge of insurance and extras "for just a few extra pounds a month" in order to boost their commission. Stand firm and don’t be pressured.
Guaranteed asset protection insurance – cover for the difference between the amount you paid for the car and how much an insurer would pay you if the car was stolen or irretrievably damaged in an accident – can be useful to have on a new car. But make sure you shop around. An online provider often costs a third of what the dealer wants to charge.
Tyre protection can be worth it if you have expensive special tyres or run-flats fitted, otherwise it’s questionable at best. With more drivers switching from diesel back to petrol, mis-fuelling insurance can also be useful but check your car and/or breakdown cover as there’s a good chance you’re already insured.
In short, don’t be sold into products you don’t really need. The annual polish and valet is a classic example. Get a hoover and chamois out and do it yourself.
2. Don’t bite off more than you can chew
Don’t let your car dealer shoehorn you into a finance deal for a car you very clearly can’t afford and shouldn’t be driving.
For example, if you are racking up 15,000 miles a year on average, don’t let the salesman talk you into signing a personal contract purchase (PCP) agreement for 10,000 miles just to bring down the monthly cost of the car to within your budget. If you do this, exceed your mileage and then decide to voluntarily terminate (VT) the agreement by handing the car back after you’ve paid 50pc of the total owed, you’re in murky water and can expect the lender to demand more money from you to cover the extra miles driven.
Dealers may also recommend a four or five year PCP to get into your budget range. But if the car hasn’t got a longer than three-year warranty you will need an extended warranty and potentially roadside assistance cover. Then there’s the higher cost of servicing once the car is more than three years old. If you buy a car you know you can’t really afford, you’ll never really enjoy driving it.
3. Don’t be lazy – look beyond where you live
If you’ve set your mind on a particular make and model of car, make sure you contact dealers out of your area to see what PCP terms they will offer on the exact same vehicle. And be prepared to travel and pick it up. Most dealers have targets and if they reach those targets they receive a volume bonus from the manufacturer. If they are short by a few cars, dealers have been known to sell vehicles at cost to hit their target.
In short, play dealers off against one another. It shows them you’re no fool and it can genuinely pay dividends. If you can, try and be open-minded about the car you’re prepared to drive: you may find that an all-round better car from another manufacturer, with more equipment fitted, is cheaper per month than the car you had in mind.
4. Check your credit rating
Unfortunately, the recording of personal credit data is very loose and haphazard with information missing and errors constantly being recorded (mobile phone companies are notorious for this). So make sure you check your credit files before even thinking of taking out a PCP – and get any errors corrected.
If you don’t do this and you are declined at your first attempt it will be very difficult to get the decision reversed on the car you’ve set your mind on. Also, check your most recent bank statements. If you have any returned items, namely a bounced cheque or standing order, you will almost certainly be declined. If it’s an accident or error, don’t bother applying until it has dropped out of your previous three months’ bank statements. Of course, if it’s a genuine bounced transaction, think long and hard about whether you can really afford the car you are considering.
5. Set yourself a budget – and stick to it
As a general guide, 20pc of your net income after tax and national insurance deductions from your monthly salary is the most you should be prepared to spend on your monthly PCP repayments. If you are a real petrolhead and give up nights down the pub or expensive holidays for the chance to drive your dream car then you could allow a little more.
Finally always make sure you check the insurance cost before you commit to a new car – never assume that because a car is roughly the same as your old one the insurance will be the same. And don’t forget service costs and fuel consumption either. The fuel consumption of an Audi Q7 can be significantly higher than that of an Audi Q5, as it’s a lot more car to move around Britain’s potholed roads.
laura.miller@Finance.co.uk
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