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Borrowing or saving? Which is best?

Borrowing. You get your car now and pay it off in bits, which is great if you have a regular income. You pay interest on what you borrow.

Saving. There's no interest to pay. It takes time to save up so you'll have to wait for the car you want. You'll lose a lump sum from your savings and any interest you would have earned on that.

A mix of the two might be best, where you borrow less and keep interest repayments at a minimum, but get the car of your choice now.

Did you know?
If you take out a personal loan for your car, you have the option of using a 'guarantor'. This is someone who will guarantee loan repayments (usually a parent) if you don't meet loan conditions. It's a great way to improve your chances of getting a loan.

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Negotiate a price

This is crunch time. If you've done your homework on market values; if you've asked the important questions and had your questions answered properly; if you've physically checked the vehicle; if you've arranged an inspection by an expert; and if you still think the car is good value, then you're ready to negotiate.

Negotiation is an art in itself. While it's true that some people are better at negotiating than others, it's an important aspect of buying a car and it's easier than you might think.

Most importantly, you should remember that a successful negotiation leaves both parties happy with the outcome. There are no losers.

Also, be patient. Patience really is a virtue in any negotiation. Walking away is your right as a buyer and you should be prepared to walk if you feel pressured or uncertain. Take time to think about the car overnight, it can take the emotion out of your decision and you can make a rational choice based on the facts.

You're ready to negotiate if you've:

  1. Done your homework on market values.
  2. Asked all the relevant questions and received adequate answers.
  3. Physically checked the vehicle to the limit of your ability.
  4. Had an expert inspect the vehicle (if second-hand).
  5. Prepared yourself financially to pay the purchase price, or at least a deposit.

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Paying up

Once you've agreed on a price, you should be ready to pay the deposit. The deposit means the car is no longer for sale and the seller shouldn't show the car to anyone else. Don't be too generous with your deposit - 10% is usually more than enough - and make sure you get a receipt that identifies the relevant parties, the date and the amount paid.

The golden rule is to trust your instincts - if you think something is dodgy, keep your cash in your pocket and keep looking.

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