We already published some information on the type of factors which should go into your decision to purchase either a used car, or a new car. We wrote about the various elements: tax, fuel economy, depreciation value, which go into the decision. We want to take that one step further and show you the importance of making a fully informed decision when buying your car and the hidden cost-savings you can make by providing some costings and a used car or new car calculator.
The first consideration when buying a vehicle is how much money do you have to spend? Once you have set your budget then you can begin to negotiate the price of the vehicle. Don’t be afraid to negotiate the price – haggling is becoming increasingly more noticeable in the market-place and remember that you’ll never force the car dealer to do something he doesn’t want to – he’s a professional and will no doubt have a final price in mind. Your task is to get the dealer to that point! Obviously if you have a trade in vehicle then you can expect a discount for the trade-in-value of the car. This value will depend on the market value of your vehicle but also will depend on whether it’s the same marque as the vehicle you wish to purchase – a particularly important consideration for the main dealer garages. So, the price you pay is the cost of the cheque you write, or the bank draft you authorise. Remember the value of the trade-in is irrelevant – the only thing that matters is: how much do I have to hand over in cash before the new car is mine?
Get quotes from different dealers where possible – at least three – this encourages competition – and then settle for the one which asks you to give the least amount of money! Seems obvious doesn’t it! However customers time-and-again fall into the trap of thinking: Dealer A is giving me a trade in of 5k on my old car but Dealer B is giving me 6k – so Dealer B must be the better bargain! Wrong! Dealer B may have applied no discount to the list price of the vehicle – where you are buying a new vehicle – so please be mindful of this.
Mileage and MPGs
By and large cars available to the market in Ireland are either petrol or diesel engined vehicles. Both of these cars will have a certain fuel economy and this is now a vital consideration. Before you buy the car establish how many MPGs the vehicle is running. There are two ways to do this: 1. Consult the onboard TRIP computer in the vehicle itself – many of these are measuring how many litres the car requires to travel 100kms. Anything less than 6 litres per 100km is absolutely fine. Anything significantly more than 7 litres is going to cost you money. 2. Consult a vehicle specification on the internet for the vehicle you wish to purchase – such as Parkers. These resources often give you, not only the number of litres per 100kms, when it is brand new but also the anticipated MPGs of the vehicle in the various years of its life-cycle – a fantastic guide.
Once you have established the MPGs of the vehicle then next you ask yourself the simple question: is this vehicle petrol or diesel? If it’s diesel then you’ll be paying around 6c to 8c per litre less than petrol so that’s a bonus.
Now establish how many miles/kms you will travel on an annualised or monthly basis, preferably monthly, it’s easier to work out. Let’s say, for arguments sake, you’re doing 2,000kms per month. Now establish the size of the fuel tank in the vehicle. If the vehicle has a 70 litre tank – like the larger family saloon cars – and your vehicle is returning 6.2 litres per 100kms then you’re going to get in excess of 1000kms on a full tank. This means you’ll need to fill your tank once every 18 days or so – less than two full fills per month. You can calculate the cost of a full tank by multiplying the tank size in litres by the prevailing market rate for the fuel to give you the cost of a full fill. You now have your monthly cost for fuel which you can annualise.
Don’t underestimate the importance of this fuel calculation. In today’s market you can easily spend in excess of €2,000 per annum more on fuel depending on whether you choose a petrol or a diesel engine, or depending, generally speaking, on the fuel economy of the vehicle you buy. It stands to reason that the newer cars are more fuel efficient, but, even among the newer cars there are wide variation in economies. As a general rule: stick to diesel if you can afford it: the MPGs are stil higher and the cost per litre is lower so you gain both ways. However petrol engines are catching up: the Efficient Dynamics BMW 320i returns 54 MPG which is pretty impressive.
Check the regime which will apply to the car: either pre-2008 or post-2008. The regime is dependent on when the car was registered, not when you buy the car. So, if you buy a 07 vehicle today the pre-2008 motor tax regime will apply to it. The pre-2008 regime is based on engine size – i.e. cc’s. The new regime is based on carbon emissions and again, like fuel economy, diesels are cheaper to tax as a general rule. Calculate your annualised Motor Tax costs. While budget 2013 rowed back on some of the advantages of lower-CO2-emission vehicles it still pays to buy a car which falls into the new regime.
Depreciation is the loss of value of the vehicle after a given number of years. It’s loosely described as residuals too: meaning the residual value of a vehicle after a given number of years. You can find depreciation guides on the internet for vehicles. Alternatively you can look-up our Partner website CarsIreland and compare the prices of the same vehicle over different years. As a general rule of thumb all new cars will lose about 50% of their value after 3 years – some more, some less. After that initial three year period the price decrease will slow down and the car will retain a market value for several years more. However, the day will come when all cars, no matter how expensive to purchase, are worth virtually nothing (unless they’re a classic or collectible).
We are not including the costs associated with insurance in our calculations but this is a consideration you should bare in mind when choosing between different vehicles. As a general rule a newer car is a bit more expensive to insure, as you’ll probably opt for fully comprehensive, but remember, the insurance company often insures the driver and not really the vehicle.
New or Used Car Costs Calculator
So, having done all your calculations here’s what you need to do now before choosing your car. We suggest you calculate vehicle costs over three years for every vehicle you are considering – then you can compare and contrast the costs and decide which one fits best.
Purchase Price [€20,000] plus annual road tax for three years [€999] plus annual fuel costs x 3 [€5,500] minus the residual value of the vehicle after three years [€9,000] = your net cost after three years.
Purchase price + tax + fuel costs – residual value of vehicle = net cost
Now, do this for all the vehicles you’re thinking of buying and I guarantee you, you’ll be shocked at some of the results you’ll get! It may prove to you that’s its cheaper over three years to buy a new car, or it’s cheaper over three years to buy a newer used car.
Please Note: The purpose of the New Car or Used Car Calculator is not to give the total cost of ownership of the vehicle. It’s designed to make it easier for you to choose between vehicles. So, for instance, we haven’t factored in servicing costs, like new tyres (which you’ll need every 40k), or NCT costs, which apply to vehicles four years old and are incurred every two years from then on. It’s true that used cars, particularly older ones, often have higher servicing costs, so to account for this you can add on additional expected costs at the end if you wish!
Good Luck with your purchase!
The Cartell Team
If you liked this blog then why not check out our latest used car advice – where we help Clare trade-in her Daewoo Lanos