Five ways to get the best new car deal

by lovemoney staff on 04 March 2013  |  6 comments
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With new car registration plates hitting the road, here are five simple steps to bagging a brilliant deal.

The new 13 car registration plates have now been released. If you're not superstitious and you're in the market for a new car, be sure to follow these five tips – they'll save you a pretty packet!

Haggle, haggle, and haggle some more

The price on the screen is not necessarily what you will end up paying. You need to be prepared to haggle! 

Whether you push for a big discount or prefer to go for upgraded extras and gadgets is likely to depend on how you’re paying.  If you’re taking out a loan, any reduction in the overall price means you’ll save money on monthly repayments, so however great the offer of an upgraded sat nav or sound system, this won’t save you hard cash.   

Dealers are usually keen to throw in ‘extras’ like free servicing, longer warranties and upgraded kit so if you’ve got the money in your pocket you may get more mileage going for those added extras and pocketing a smaller discount.

For tips on how to haggle, check out Improve your bargaining skills.

Buy on a Monday

You’ve done the test drive, shopped around, and are ready to seal the deal. But when’s the best time to sign on the dotted line?  

According to Jonathan Williams of Autotrader, around ten on a Monday morning is best. That's because the dealerships will have just finished their sales meeting and everyone’s buoyed up and eager to clinch the first sale of the day.  

Also, waiting until the end of the financial quarter (so, for example, holding out until the end of March) can maximise your chances of a good deal as sales teams will be under increasing pressure to make any last sales needed to meet their targets.

Shun expensive showroom finance

More than two thirds of new car buyers still go for a dealership finance deal, according to the Finance and Leasing Association, the trade body for the car finance industry. If you don't have savings in place to pay for the car, ‘forecourt finance’ can seem the easy option when you’re sitting on the showroom sofa with a frothy coffee in hand. But this can cost you more than if you shop around for a personal loan. 

Based on the ‘average’ new car price of £17,000, by the time you’ve negotiated, put down a deposit and factored in any ‘part exchange’ deal you could be looking at a loan of up to £10,000 says the RAC’s John Franklin.  According to Nationwide, the average forecourt rate of interest, (based on a good credit rating), is 9-12% on new cars, whereas taking a personal loan from the high street can be around half that at around 5.5% interest.

To compare the leading personal loans on the market today, head over to our personal loan comparison centre. And remember, the smallest interest rate may not equal the cheapest loan. Make sure you work out the total amount repayable.

Save your cash for now

Dealerships can however come up with some headline-grabbing 0% deals. 

If your credit rating is such that you can secure one of these deals, even if you can afford to pay outright for your new motor, you could be better off stashing your cash in a savings account. You can then drip feed funds from your savings into your current account to meet those monthly interest-free payments.

On the flip side, savings rates are pretty miserable, with the best accounts only paying around 2%. So if you miss a payment on your car deal and are clobbered for the full interest this immediately wipes out any financial gain.

But if you can commit and stick to the payments, you could come out a winner, both with a new car and some interest earned at the dealership’s expense. Just be sure to read the small print carefully before signing up.

Use your credit card

If you’ve got a decent credit limit, paying with a credit card charging 0% on purchases can be a cheap option.

But while you’ll save on interest, you may incur a credit card handling fee. Companies are typically charged up to around 3% for credit card payment and many dealerships will pass on these charges. If you opt to put the bill on your card, make sure you clear the balance before any introductory 0% deal ends and higher interest rates kick in, or switch again while you pay off the debt.

Right now you can secure up to 16 months at 0% on a Tesco Clubcard Credit Card or 15 months with Halifax's All in One MasterCard or the M&S credit card. For a comprehensive guide to the top 0% purchase cards, read The best 0% purchase credit cards. 

Another bonus of paying by credit card means you’ve got automatic protection under the Consumer Credit Act, so even if you’ve only put the deposit on it, if there’s a problem or the garage goes bust you can get your credit card company to stump up. Check out How Section 75 can protect you for more.

This is a classic lovemoney article

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