Deals on wheels - how to finance a new car

So, you’re in the market for a new car? Maybe you’ve even set your heart on a specific make and model? If you already have savings to buy it outright, even better, but not many of us do. So how do you go about buying a new car without running your finances off the road?

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Work out what you can afford

Whether you’re planning to buy the car outright by setting money aside, or want to buy on finance and pay it up instead, you’ll need to consider how much you can afford to save or repay each month.

If you do know the make and model, leading auto site Parkers have a great online calculator that can tell you what the car will really cost to buy and run. Alternatively, work the other way around. If you know how much you want to borrow on finance, check out the budget calculator on, which gives you estimated monthly payment and total payment figures.

Look into running costs

The price of fuel isn’t to be taken lightly. Diesel cars are more fuel efficient, but they’re generally more expensive (as is the diesel itself, as opposed to petrol), so you’ll be driving it for quite a while before you start making any savings. Check out Which? magazine’s fuel economy calculator before you make up your mind.

“Don't be afraid to walk away if you don't get the price you want”

Remember, if you’re actually buying a new car (rather than leasing it) you should consider the depreciation (the difference between a car’s value when you buy it and when you come to sell it). The Money Advice Service estimates a new car costing £14,000 could depreciate by as much as £7,600 in its first year – definitely something to think about.

Buy at the right time

Dealers usually have quarterly sales targets to meet, so early March, June, September and December can be some of the best times to buy. You don’t want to leave it too late though or targets may have already been met. Also, it’s best to visit a dealership when it’s been quieter, so avoid the weekends and the few days after payday.

Get a different view of finance

It might be tempting to take out a bank loan for a car, but don’t leap in until you’ve looked into Personal Contract Purchase (PCP). Despite its pretty dull name, PCP lets you pay up monthly without having to pay off the full value of the car. Put simply, you’ll (usually) pay 10% of the car’s value up-front, then borrow the amount the finance company expects the car will be worth at the end of the loan term (probably 2-3 years). At the end of the term, if you want to own the car, you can make a ‘balloon payment’ for the remainder of the amount – but there’s no obligation to do so.

Ask about pre-reg and test-drive models

Dealerships sometimes pre-register cars in order to meet their targets, so – in theory – they are owned by the dealer. Ask if the dealership has any in stock and see if you can negotiate a discount. Similarly, you might get an even better deal on a car that’s been used for test drives.

Don’t forget to haggle

Before you go to the dealership, look for the very best price you can find for the car you want. That may be online, or at the other end of the country, but arm yourself with the comparison prices and try to haggle the price down. Don’t be afraid to walk away if you don’t get the price you want – you may well get a follow-up phone call offering you a better deal.

This blog is a bit of fun and not intended to influence your decisions in any way. The content of the blog is reliable at the time of publishing, but we can’t guarantee that it is neither error nor omission free, beyond our knowledge. The links are there for you to explore if you wish, but we don’t have any connection with the third party sites, nor responsibility for them or their content.