Knowing no one has driven your car before you can be a seductive thing, but from a financial perspective, is it ever right to buy a fresh-off-the-showroom-floor vehicle?
With a new batch of number plates recently released, you might be considering whether it’s the right time to buy a new car. Buying a brand new car can make good sense. You can have precisely the car you want, with your choice of specification and no compromises. It comes with a full warranty and the knowledge that no one has driven it like it was a hire car. New cars tend to be more fuel efficient and greener, coming with lower road tax costs and more advanced technology. Oh yes, a new car can be a wonderful thing.
However, it’s impossible to ignore the rapid depreciation associated with buying a brand new car. Your car will lose 20% in value the moment you drive away, plummeting 40% in the first year, and 60% in the first four years. That means that if you buy a £15,000 car today, it will be worth just £6,000 in 2019. That’s a lot to pay for that new car smell.
What’s the Answer?
The most financially sound choice is a nearly-new model, something that is six to twelve months old, and which preferably hasn’t been used as a hire car or a company pool car. Good choices are a demonstration model from a dealership, or one they have bought pre-registered in order to meet sales targets, but which they never actually sold. With 5-year warranties being typical, and 7-years becoming more common, you still have a reassuring amount of time left to be worry free.
When is the Best Time to Buy?
If you absolutely have to have a brand new car, there are certain times of year when it’s better to buy. There are deals to be had in February and August, when showrooms are working to get rid of “old plate” stock before the new plates come in. Likewise when a new model car is about to come out, old stock is sold at a discount – particularly if the shape has changed. The last quarter of the year is traditionally the quietest for dealers, and they may offer you more incentive to help meet their sales quota, whether it’s a lower price or added extras.
Whether you’re buying a new or nearly-new car, you should always take it for a test drive before agreeing to a sale. Factor in extra costs such as petrol, insurance, and maintenance, and make sure you can afford to run it. Extras such as Guaranteed Asset Protection (GAP) and insurance are rarely good value from your dealer. Always remember that, with seven million used cars being listed for sale in the UK every year, it’s a buyer’s market.