Steer your finances in the right direction if you are buying a new car
You may be more motivated to buy a new car with the introduction of the Government Scrappage Scheme in January. And, with many garages also offering their own scrappage schemes, the new car you’ve been dreaming about might seem more affordable than before. But, while it’s easy to get caught up in the excitement of buying a new car, take a moment to weigh up the pros and cons - is it right time to scrap your car?
If you have decided that you are going to buy a new car think Affordability, Finance and Insurance before you move on to colour, make and model.
Affordability
Firstly, you’ll need to decide exactly how much you can afford to spend. Use our budget planner to figure out how much you can afford to spend each month to pay for your car. And don’t forget to factor in ongoing costs like petrol, maintenance, insurance etc.
Finance
Unless you have savings, it’s likely that you’ll need to borrow to buy your car. Once you’ve done up a budget and can see how much you can afford to spend each month, you can use our personal loan calculator to figure out how much you may be able to borrow.
If you are planning to borrow money, it may seem like a convenient option to sign up to a car finance agreement from the garage. You may think you’re taking out a loan to buy your car when in fact what you are really signing up to is a hire purchase agreement. When you pay for a car using hire purchase you are paying to hire the car and you do not own it until the last repayment has been made. These agreements are generally not as flexible as personal loans as you cannot sell the car in order to pay back what you owe. Make sure you know how hire purchase works before you sign-up to any car finance agreement. Ending a hire purchase agreement early can also be quite complex.
Insurance
While you might save money on repairs with a new car, you will still need to pay for your motor insurance. Start by taking a look at our latest motor insurance cost comparison as a guide- it shows potential savings of up to €1,810 on yearly motor premiums for sample driver profiles. Then print off our shopping around checklist - it will help you decide on the type of cover that you need and to keep track of the quotes you get and what they cover. There are lots of ways to reduce your motor insurance premiums if you do your homework.
Published Date: 04/02/2010