You’ve decided to leave the joys of public transport to the past and enter into car ownership- but what’s the best option for a limited budget?
Do you definitely need a car, or just a lift?
Car pooling can be for regular or one off journeys and is where one person owns a car and gives lifts to other people who live nearby and/or travelling in the same direction. The most common form of car sharing happens on the journey to and from work. There are a number of websites dedicated to matching drivers and passengers, and car sharers don’t have to work for the same employer or live in the same street. As long as car sharers live nearby and are travelling to the same city, they can share a journey.
How it works
The passenger will pay a fee to the car owner for the lift. The fee is negotiated between the car owner and the passenger and typically covers the cost of petrol for the journey. The journey then becomes less expensive as the costs of running the car is shared between the car owner and passengers. The car owner can choose to have as many passengers as their car will accommodate. The more passengers, the less expensive the journey becomes.
What to watch out for
Safety may be a concern – each website has their own set of rules designed to ensure the safety of users when car sharing. Check each website carefully. If you don’t feel safe, don’t do it.
Check your car insurance to ensure that you’re still covered if you car share.
Car sharing sites:
Car Pooling Pros
- Share the cost of running the car
- Meet new people
- Help the environment
Car pooling Cons
- It only works if someone is driving the same way as you
- Prices vary and need to be negotiated
To Buy Or Not To Buy?
You’ve decided you definitely need to invest in a car. Is it better to buy new or second hand?
Many people like the idea of owning their car and buying it outright. However, not everyone can afford the large deposits needed to buy a new car. What’s more, new cars depreciate in value so you’re actually losing money by buying the car outright.
However, buying a second hand car is a more affordable way to own a car. This means going to a used car sales court and seeing what’s available.
Do your research beforehand so you know what the car’s worth. If you can, take someone who knows a bit about cars with you.
What To Watch Out For When Buying A Car
Buying a car- pros
- You own the car
- There are no extra repayments needed (if paid in full)
Buying a car- cons
- The car depreciates in value
- You’re responsible for upkeep and maintenance
Rent A Car
If you need a car for a certain event, or a certain journey, you may find it easier to rent it. There are numerous rental agreements ranging from a matter of days to a number of months. It means you get the convenience of a car without the maintenance costs involved such as repairs should the car break down. In fact, some rental agreements can include 24 hour emergency assistance as well as maintenance and vehicle recovery.
However, you are responsible for any damage to the car whilst it’s in your possession and renting a car can be expensive, particularly over a longer period. There are extra charges for insurance too.
Renting a car- pros
- Can get a nicer car than you would have been able to afford
- Not responsible for maintenance
Renting a car- cons
- You don’t own the car
- Long term renting can be more expensive than if you’d bought the car
Hire purchase is where you pay around 10% of the value of the car upfront, then make a monthly repayment towards the cost of the car. By the end of the agreement, provided you’ve made all repayments on time and in full, you own the car.
However, your repayments include interest and you must check your hire purchase agreement to ensure you know the full cost, as you could end up repaying more than the car is worth. What’s more, if you fail to make repayments, the car can be repossessed.
Hire Purchase- Pros
- Car is reliable
- More affordable
Hire Purchase- cons
- Can repay more than the car is worth
- Car can be repossessed if you don’t keep up with repayments
As the cost of buying a car can be expensive, some people may decide to take out a loan in order to purchase their car.
Small loans from loan providers give customers the money they need for important purchases and customers know the full cost of their loan upfront. What’s more, if circumstances change and the customer misses a repayment, their car will not be repossessed as would do if a customer had a hire purchase agreement.
Personal Loan- Pros
- Know the full cost of the loan, upfront
- If you miss a repayment your car won’t be repossessed
If you’re interested in buying a car but don’t have the available funds, car finance could be an option. This is where you take a secured loan out against you car. People with bad credit could also get accepted from lenders such as MoneyBarn.
Car Finance- Pros
- Can get the car you’d like
- Even if you have bad credit, you can be accepted
Car Finance- Cons
- If you miss repayments your car can be repossessed
Further Hints & Tips
- Make sure you know the list price of the car- look at WhatCar? for this.
- Know what you can afford to pay for the vehicle. Have in mind a top price, a medium price and an ideal lowest price in mind.
- Be prepared to haggle- read our guide here and stick to your guns if you want a good deal.
- Go to the car showroom at the end of the month as this is when salesmen need to meet their sales targets and will be more open to negotiate.
- WhatCar? have an extensive list of what you need to know before you get started.