This week at Car & Home Stereo, we’ve got a guest blog from Skyzack LTD.
Skyzack LTD is a business support club based in Macclesfield. Their mission is to ‘help small and medium sized businesses become more visible while providing opportunities to young people interested in getting into business for the first time.’ This in mind, one of their team members, Aaron, would like to share a young persons perspective on buying your very first car.
What to consider when buying your first car:
When it comes to passing your driving test, the next big, exciting part is buying your first car! We would all love to jump straight into a brand new Mercedes, but let’s think realistically, there are many things we have to consider. From running costs to reliability, here are some of the most important things to consider when buying your first car as a young person.
Many young people won’t be able to afford a Mercedes, so when it comes to choosing the right car for you; we have to think about the price, what is your budget? Are you buying the car out right or are you considering finance and spreading the cost over a few years? With finance there are many options you can take to suit your needs. For all finance types you will need some kind of deposit; the more deposit you have to lower your monthly payment will be.
Below is a list of the different types of finance you can get:
- HP: Higher purchase is where you spread the cost over so many years and you own the car at the end of the finance. The monthly payments are likely to be higher depending on how many years you spread the cost over. For example, you can spread to cost from 1 year to 5 years.
- PCP: Personal contract purchase is where you can suit the payments around your budget. When it comes to the end of the finance agreement, there are 3 ways you can go about it. 1: You can give the car back, 2: You can give that car back as a deposit for a new car, or 3: Pay the lump sum of what’s left to pay for the car.
- PL: Personal lease is something perhaps not many young people will consider using. This is because a personal lease vehicle has to be returned in the same condition you brought the car in; otherwise you’ll be hit with a massive bill to pay for the damages and as a new/young driver it probably isn’t the best option.
Depending on how much you pay for the car, the year of the car and how long you want the finance the car for, each finance option is different. When it comes to buying a car from a well-established dealership, they will talk you through the best options depending on the car you want to buy.
If you are over the age of 18 years old, many car dealerships will have good deals on brand new cars on finance. There are even some schemes in place where you get the car, insurance, tax & car servicing is all included within the price of the finance and you just pay for fuel. For most young people this is a great idea as we don’t tend to think about road tax and having ours cars serviced often.
Overall, finance is a great way to be able to get an up-to-date car as long as you can afford the repayments!
If you decide against going for one of the many free insurance finance deals, you need to think about how you are going to insure your car. Insurance for young drivers has sky rocketed throughout the years. With an average of £2,700 for a young driver, this is certainly going to be one of the most important things to consider. How are you going to pay? There are 2/3 options.
Paying in full: This would definitely be recommended when paying insurance as it is the cheapest way to paying your insurance.
Paying monthly: Paying monthly is more expensive than annual as you are essentially loaning the money from your insurance company. This means you have to pay a percentage of APR on top of the insurance price. This is usually broken into a deposit and 10/11 monthly instalments.
Family/friends help: If you don’t have enough money to pay the full annual payments but don’t want to pay extra when paying monthly you could always ask a family member or close friend to pay the insurance in full then you pay them back using monthly instalments, that way you don’t have to pay the APR on top but you can still pay monthly.
How to get the price down:
Avoiding comparison sites is our recommendation; they do make the insurance search a lot easier, but more expensive. If you would like to get a general price you may end up paying then use a comparison site. However, insurers have to pay comparison sites commission, so it will bump up the price a bit. Most insurers will offer you a lower price if you get a quote by calling them. Adrian Flux states that 75% of their customers can receive a cheaper quote over the phone.
Buying new or second hand:
When it comes to buying a car, you’ll have to decide if you want to buy a second hand car either from a dealership or a private seller. Or you can buy a brand new car with the spec & colour of your choice. Buying a new car is great. You get a fresh car completely of your styling and choice to show off to your friends, but in the long run it may not be worth it.
As of 2014; 40% of 17 year old male drivers crash within their first 6 months of driving – itv.com. So if you are one of them, you would ruin your new pride and joy. And if you don’t have the correct insurance, you may be in for a hefty bill.
You should definitely consider adding Gap insurance to your policy if you are going to finance a new car.
What is it? Gap insurance (Guaranteed Auto Protection) is the difference between the actual cash price of a vehicle and the balance still owed on the financing. When you take out finance, you pay more over the finance period than what the car is worth. For example, if you bought a car for £10,000 with a monthly interest of 6%, after 3 years you would have to pay £11,910 back through monthly payments. In the event of a crash, your insurance company would pay you £10,000 for the car value. Gap insurance would pay £1,910 for the remaining balance. Without gap insurance, you would have a written off car and still be paying £1,910 for it.
Buying a used car, however, still has similar risks involved. Purchasing a used car will not give you the choice to have your own personal touch, unless you modify it and it may not be as reliable. Another issue involved is if you don’t receive a warranty, is the chance of your car breaking, potentially even 5 minutes from leaving the garage. If this happens and you have no warranty, there isn’t much that can be done. However if you manage to purchase a reliable used car, you will have a car that you can change to your taste and love like a new car, then in a few years’ time, you can go ahead and buy your dream car.
These are just a few of the main things you need to consider when buying your car and each choice is personal to you. Some of you may prefer a new car, some may just want a cheap run around. Either way, your car is your pride and joy. So go out there, find your dream car and be safe!
Whatever choice you make, remember that you can upgrade your car with Car & Home Stereo. Contact them today on 01625 432707. Or pop into the shop on Sunderland Street, Macclesfield.
Written by Aaron Cavanagh of Skyzack LTD.