With the first shiny ’12’ plate cars now hitting the road, car dealers will be happy that more people are looking to buy a car over the coming year.
According to the latest Car Purchase Index for AA Financial Services, nearly a fifth of respondents in the study said they will buy a car over the next year, up 2% on last year.
Many will use their savings account to fund their purchase, whilst some will get a personal loan to do so or use ready cash or investments.
As Mark Huggins, director of AA Financial Services, commented: “Interest in buying cars appears to be reawakening since the successful Scrappage Scheme ended two years ago; and since the VAT increase of last year added around £500 to the typical price tag of a new car.
“Continuing low interest rates and people nervous about building up too much personal debt means that using savings, or other ready cash is still by far the favoured way of buying. But recent small interest rate falls from many lenders, including the AA, is leading more people to think about taking out a car loan.”
Many looking to buy a new car are wanting one that is cheaper to run – perhaps not a surprise with the current cost of running a car, not helped with the increasing cost of petrol and diesel.
Even with the average price of diesel now at almost 145p per litre, diesel powered cars are still the nation’s favourite. Nearly 50% of those planning to buy a car say they will choose diesel compared with 44% going for petrol.
MoneyHighStreet comments: “It’s not just the cost of buying the car that needs to be taken into account, rather it’s the total cost of buying it and then of course keeping it on the road.
The fuel (whether petrol diesel, hybrid or electric) is part of the equation but then there’s ongoing maintenance and of course car insurance too.
It may well be worth considering certain makes of car to save money on car insurance. For example insurance on a Ford car will be less than on a Ford focus, assuming the basis of the insurance is the same.
“You can save money by carefully considering the cover you actually need – do you for example need fully comprehensive cover or will third party, fire and theft will suffice. Also what excess are you willing to pay and do you need a courtesy car should your car be off the road following an accident.
“There are also specific young drivers car insurance policies available that may be worth looking at. For example the Co-op have their Young Drivers insurance policy with which if you drive safely you qualify for Safer Driving Discounts to help reduce your premium.”
“Be aware too that it may be worth considering buying GAP insurance. Whilst another cost, this is designed to cover the ‘gap’ or shortfall between the amount you can claim on your car insurance and the amount you need to pay off on any finance or to replace the car should it be written-off.”