Buying a car? Beat the VAT hike!

If you plan to buy a new car, you'll need to get your skates on to beat the VAT jump. But there are other ways you can get a cracking deal too...

Winter is always a time that makes me start to think about getting a new car. It might have something to do with the mornings I've spent silently praying that the car will start - our car is a touch on the temperamental side.

And I'm clearly not alone. According to research from BMW Group Financial Services, a whopping 41% of drivers are either planning or considering buying a new or used car in 2010.

Here comes a price jump!

If you are one of those drivers, and want to get the cheapest possible deal, then you will have to get your skates on.

From 1 January, the temporary cut in VAT comes to an end, and that means the tax you pay on purchases will increase from 15% back up to 17.5%.

So that car that has caught your eye for £12,000 (before tax) will cost you an additional £2,100 in VAT in January, compared to £1,800 beforehand.

That £300 could likely come in pretty handy, so if you've been holding off going for it, now is the time to take the plunge!

Make sure you get a great deal

But if you haven't seen the car you want already, and know that you will be facing up to shelling out more thanks to the VAT hike, there are a number of ways you can ensure you get a great deal on any car purchase.

Here's my quick and easy guide to getting a good deal.

#1 New vs. Old

The first thing you need to decide is whether you want to go for a brand new car, or go for an older model. One thing to always bear in mind is that by driving a new car off the forecourt, its value absolutely plummets. If you buy a used car, the majority of the depreciation has usually already taken place.

#2 Do your research!

Once you have decided what type of car to go for, it's absolutely essential that you do some proper background on it. Not just on how much it is likely to set you back - to ensure you don't get ripped off - but also how much it will cost you to run.

Firstly, consider your tax bill - you will be taxed according to your CO2 emissions, so make sure you check the DirectGov website to see what tax band it is likely to fall in.

You'll also want to work out how fuel efficient the car is, and how much it is going to cost you to insure. When the time comes to get your car insurance, you can use lovemoney.com's excellent car insurance quote tool to ensure you get the best deal!

#3 Where to buy?

The next thing to consider is where to buy from. You can get an amazing deal at an auction, but there's a heap of things to consider if you're going down that route, so be sure to read the lovemoney.com guide to Buying a car at auction before you fancy doing your best David Dickinson impression.

Alternatively, if you opt to buy privately or from a dealership, then make the most of sites like Parkers, What Car? and Autotrader for finding an attractive deal.

Be patient - the right car will come along at the right place. Don't blow your budget on the first vaguely attractive car you see!

#4 Be vigilant with your checks!

This is the crucial one really. Everything with the car can appear perfect, but there can be plenty of hidden nasties lurking under the surface.

It's crucial that you check everything from the paperwork to the brakes. If you don't, what looks initially like a great deal could end up costing you an absolute fortune. 

The AA has a quite brilliant guide on what you should be looking out for which I'd definitely recommend.

#5 Haggle, haggle, haggle!

I know it can feel a bit awkward, but if you don't ask, you don't get! Don't simply accept the price you're quoted - see if you can drive the salesman (or owner) down a bit, or at least see if they can throw in a few extras.

For a few tips on how to negotiate a better price, have a read of The art of haggling!

Follow those steps and chances are you'll save enough on your purchase to cover the extra VAT you'll be stuck paying! You should also be sure to check out the hints and guidance in our goal: Buy a car for less

Time for a personal loan

Of course, one of the most popular ways to pay for a new vehicle is to turn to a personal loan - indeed 13% of those who said they were looking at purchasing a new car in 2010 said they would be doing so by getting a personal loan.

Personal loans is one area where there has been some proper competition among the credit providers, to the point that you now have a range of very attractive looking options.

I've put together my selection of the five best personal loans in the market today, based on a loan of £10,000 over five months.

While these are without question all cracking looking deals, with many there are a few hoops to jump through. If I was getting a personal loan, I'd probably go for either the Alliance & Leicester loan or the deal from Sainsbury's, as getting a Nectar Card is a lot easier than going through the rigmarole of opening a new current account just to get my hands on a cheap loan.

I'd also recommend having a good read of Six top tips for an affordable loan, which has a host of very useful tips on exactly what you should be considering when applying for a loan.

Get help from lovemoney.com

If you want to cut your spend on your car, there are loads of different ways lovemoney.com can help.

First off, why not follow some of the hints and tips in our goal: Cut your car costs

Next, check out this video: Don't make this car insurance mistake

And finally, why not pick the brains of your fellow lovemoney.com users via our Q&A section?

More: Radical changes to current accounts | Earn £200+ while you shop!