In the 123.ie Great Irish Car review, which surveyed almost 6,300 drivers in Ireland, 38% of people said they were planning to change their car in 2016. Buying a car is a big deal. The idea of cruising in a brand spanking new car might be very appealing but you shouldn’t get ahead of yourself.
To avoid overpaying for a car and getting into financial trouble, you should create a budget.
Step 1: Do the math
Determine what you income and expenses are. Don’t forget to base your income on your take home pay after tax.
Step 2: What can you actually afford?
Figure out how much you can comfortably afford and see does it match your expectations of how much you want to spend.
Step 3: The loan rule
If you’re budgeting it usually means you are planning on getting a loan. The general rule of thumb is that you shouldn’t spend more than 20% of your monthly income on your car loan payments.
Saying that – the 20% is dependent on your income and how much expenses you have coming out each month.
Use a car loan calculator
If you want a better idea of what you'll be paying for your new car every month try a car loan calculator to estimate the monthly repayments for the vehicle you want to buy at the interest rate you are expecting to pay.
Other costs associated with a car
If you include the below factors in your car budget it can help you to avoid surprises.
• Tax – you can check how much the tax will cost on the motor tax website
• Insurance – get a quick car insurance quote with 123.ie and see how much your insurance will set you back
• Monthly car payments
• Tax and insurance
Potential other costs
• Traffic tickets
• Car accidents
Where to buy
1. Privately vs Dealership
There are many websites where you can buy a car privately such as Autotrader.ie, CarZone.ie, DoneDeal.ie etc. Private cars do seem to be going for cheaper than in a dealership as you aren’t including the dealer’s margin and the overhead costs of running the business.
The price may make your mind up for you but just note that there are some advantages to paying extra and buying from the dealership, e.g. dealers selling used cars will usually provide paperwork describing the car's history and some may even provide a warranty with the car.
Point to note: Privately
Don’t inspect a car at night or in wet weather as you might not be able to spot scratches or bumps.
Point to note: Dealers
As salesmen work on a commission basis they are going to be looking for a high asking price, so make sure to haggle!
What to ask
• When did you buy the car?
• Why are you selling the car?
• Can I see the log book?
• Do you have ID and is your name on the log book?
• Has this car ever been crashed?
• Was the car first registered in Ireland/was it imported?
• Has there been any mechanical work done to it?
• What is the mileage?
• When was the last full service carried out, and by whom?
• When was the timing belt done?
• Where is the VIN number? (Should match that in the log book).