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5 Steps to Car Ownership in the UK

By Barry Donaghue
Published on September 15, 2020

Car Dealership

Buying a car is an emotive purchase until the head kicks in and you try to convince yourself it is the perfect one. That’s all well and good if you get it right but sometimes – we are human after all – we let our hearts rule our heads. Follow these simple steps and you will be on to a winner.

Shopping around for a new car is often fun, exiting and an emotionally charged experience. The ambiance of a showroom, the gleaming array of the stock on display, that new car smell all adds to the moment. But for some, it can be quite time consuming, filled perhaps with apprehensions, concerns and hard choices. After all, you would never buy the first house you look at, so why would you buy the first car you check out? A car is probably the second highest value purchase most people make after their home, so it is important to get it right. Because even though it is a necessity, unlike your home it is a depreciating asset.

Like most things in life, one size never fits all. So, how do you make the right choice? Here are five tips to help you save money but naturally, one’s own prudence and common sense need to be exercised.

1. Trigger:

Always keep in mind what triggered that initial thought, "I need to get a car". We all have different reasons for needing a car, or two. It could primarily be for business use, pleasure or both. Whatever your reason, never lose sight of what prompted you to factor that item in your "To Do" list.

2. Fit for purpose:.

Consider what your needs are for the car: will the one you are considering take care of these needs or will it be surplus to consumption. Is it just to commute from home to work and back? What use will it have to meet at the weekend with the rest of the family? Can you manage with one or will you need two? Does it have to be new or can you live with a used one? How long will you need it for, short term or long term?

3. Budget:

If money is no object, then the automotive world is your oyster and you can have your pick of the pearls.

However, for most of us a budget is what we work towards. So, take into account the whole life cost of the car and not just the ticket price. This is where you will need to consider things like, Petrol or Diesel engines, Hybrid or Full Electric, fuel and EV charging prices, range of travel on a full tank or fully charged battery, your annual mileage consumption, the manufacturer’s recommended service intervals and their respective costs, taxes and Insurance premiums.

Whilst pressure is growing in the UK on motorists to switch to pure-electric cars with various government incentives (EV grants, Parking Exemptions or Reductions) and deterrents (Taxation, Congestion Zone and Ultra Low Emissions Zone charges) the number of electric car sales in the UK remains relatively small compared to their fossil fueled alternatives. But things are changing; the UK government has already set its target to ban the sale of Petrol, Diesel and Hybrid cars by 2035. As a matter of fact, some manufacturers have announced that by 2021/2022 they will only offer hybrid or full electric cars in their model line up. The UK government has already invested in infrastructure to encourage everyone to make the switch and this will continue to grow.

Road Tax (VED – Vehicle Excise Duty) paid annually is based on the CO2 emissions and fuel type of your car. It could range anywhere from £10 to £2165 in the first year on a new car which came into effect from April 1, 2020 and then drops down to the standard rates from the second year onwards which can range from £140 to £475. If it is a company car, this will be subject to “Benefit in Kind” (BIK) taxation which ranges between 0% to 37% of the value of the asset, deductible against your personal income tax allowance. The moral of the story… the more environmentally friendly your car, the better off you are in the pocket.

4. Funding Methods:

Bearing in mind that a car, unless it is a "Classic", is a depreciating asset, so should you buy it or lease it? This would depend on whether you choose to buy a new or used car. Manufacturers have always offered better finance packages on new cars than on their used stock. Consider whether you wish to have ownership of the vehicle at the end of the finance term or would you rather have the option to change or hand it back. If it is the latter, then leasing it makes sense.

5. The Brand:

Brand loyalty, as with any product in the market place, is something every manufacturer strives to attain and maintain with their customers. We all have our favorites, whether it is a television, smart phone, laptop or a car. Do you have one? Consider other factors too, like reliability, running costs and long term desirability. This is so important as you don't want to be stuck with a car that is hard to sell on, especially if your need for the car is only short term.

Barry Donaghue is the principal of Personal Car Shoppers, who can help you find and buy the perfect car for you www.personalcarshoppers.co.uk

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