ConsumerValue: Transport and Travel
2. Cars
No matter which way you look at it, there is no such thing as a cheap car to run. Some cars offer more fuel efficiency or come with energy saving features, but the truth is that a car is a depreciating asset and requires, as a minimum, fuel, tax and insurance cover on an annual basis.
So the principal question to ask when it comes to the cost of running a car is whether, in fact, you need one at all.
For those of us living outside the centre of the main towns and cities, the answer is probably heavily influenced by access to public transport, or the lack of it.
Yet while for some travellers there is simply no alternative, for others a close analysis may reveal more cost effective - and more environmentally friendly - options.
The "Smarter Travel Workplaces" campaign (formerly "One Small Step") was launched to assist consumers in understanding the implications of the transport choices that they make.
The campaign's website has a calculator which enables consumers to calculate the fuel and carbon cost of their journeys by car, as well as setting out the calorie value they could burn by walking or cycling the same distance.
So, while considering the following tips on how to save money in running a car, also consider the alternatives. It could be good for your wallet, for your health and for the environment.
Choosing a car: new or second-hand
The motor taxation regime in Ireland changed during 2008, and a twin track system of motor taxation now operates, with the introduction of an emissions based system for all new cars being registered in Ireland for the first time after July 2008.
Motor tax for new vehicles registered on or after 1 July 2008 is determined on the basis of you car’s carbon emissions and is broken down into seven CO2 bands.
Charges range from €104 a year for the greenest cars to €2,100 for cars with the highest emissions ratings.
So when considering the purchase of a new versus a second-hand car, it pays to consider the motor tax calculation implications, which can increase or reduce the tax payable when compared with the pre-July 2008 regime. Check all the details on MotorTax.ie.
Many drivers automatically assume that the best value is to be had in second-hand cars – it’s a snippet of “received wisdom” that cars lose 20% of their value as soon as you drive them off the forecourt.
But it is often possible to strike excellent deals on new cars if you know some of the tricks. End-of-range models are often heavily discounted just before the arrival of a new model.
Similarly, later versions of a particular model often carry a better specification arising from improvements made over the lifetime of that model, so be sure to investigate all the options.
In the 2009 budget, the Government introduced a Scrappage Scheme for cars 10 years old or more when a new low-emissions car is purchased before the end of 2010.
The scheme is worth €1,500 off the price of a new car once certain conditions are met. On top of that, many dealers are supplementing the government scheme with their own scrappage offers. With so many offers out there and dealers disposed to making sales during the lifetime of the scheme, if you do your research and shop around you could drive off with a good deal.
Check the details of the scheme and why 2010 might be a good time to change cars.
Information on new models can be found in the motoring press and on car websites.
In the current economic climate, there is a huge amount of value to be had, both in new and in second-hand cars. As well as the Government Scrappage Scheme for new cars, some manufacturers are offering similar discounts on the purchase of second-hand cars.
The best way to find value is to inform yourself about the particular market you’re shopping in and shop around. Here are some pointers to try to make that a little easier.
Fuel efficiency
Depending on our driving habits, concerns around fuel efficiency can vary.
If you plan to use your car for short journeys only, consider a smaller engine, which will consume less fuel. By contrast, if you expect to have high mileage, then you may look to a higher powered diesel engine, for fuel efficiency and performance reasons.
Do your homework, investigate the options, read reviews and understand what you need the car to do for you.
Overall running costs
Whatever car you choose, think about the likely additional running costs. Consider the cost of insurance, road tax, NCT testing, repairs, servicing and spare parts.
As with all purchases, when considering insurance costs, shop around for the best deal.
Our itsyourmoney.ie website contains information on motor insurance. Our ConsumerValue guide to Insurance also offers tips on striking the best deal on car insurance.
As far as servicing, repairs and spare parts are concerned, remember the more exclusive the make and model, the pricier general maintenance and repairs are likely to be.
Remember, too, that you are under no obligation to have your vehicle serviced at the garage where it was purchased (if you source from a dealer).
Read our consumer guide to servicing and repairs for more information on this.
Finance
Once you have made the decision to change your car, your next big consideration is how to finance it.
Typically, people finance their car purchases through a mix of the following:
- Cash in hand
- A bank finance deal (personal or car loan)
- A dealer finance deal
In the present climate, cash is very definitely king and buyers who walk into a showroom with cash in their pockets are best placed to drive a hard bargain on the purchase price.
Remember that while some incredible dealer-based finance packages may be available, these are often based on financing the full or list price of the vehicle. They may also contain clauses requiring "balloon" payments (a large final payment at the end of the term). The central message here is do your homework in advance.
Know how much you have to spend and how you plan to finance it, then be prepared to play hard ball. This is now a buyers’ market, and both dealers and private sellers have stock in hand they are anxious to shift, so there is value to be had.
Our itsyourmoney website has a useful guide to finance packages for car purchase.
For current personal loan and car loan rates, consult the websites of the financing institutions directly or the Cost Comparisons area of ItsYourMoney.ie
Shop around
You will find information on cars for sale in dealer showrooms and forecourts, in trade magazines, in newspapers, in classified ads, online, and on signs in shop windows and noticeboards.
Checking these sources is like window-shopping in that it gives you an idea of what’s available and is a good way to get to know the market.
It may be helpful to put your price range into a website search to see what cars it identifies for that type of money.
You might also consider doing this in the "new cars" section of the site, as you may just see something there that might also be suitable for the same money you’re willing to pay for a used car.
Remember, cars are one item where the price on the sticker is rarely the price at the till, so don’t be shy about haggling and leverage your advantages (cash, a strong trade-in model/nothing to trade etc.) to strike the most advantageous deal for your money.
Trading in
Get to know how much your trade-in is worth. Check motor magazines/websites for similar models to your own and look at the prices.
Ring and get a “straight deal” price (i.e. a “cash” price) from several dealers for cars you’re interested in buying.
This should give you an idea of which dealers are willing to offer the best discounts. This information can be helpful when you approach the dealer with a trade-in proposition.
If you are not happy with any dealer’s trade-in offer, you might consider selling your car privately.
Generally, you will get a better price for your car if you sell it privately rather than trading it in.
You may find it awkward and time-consuming, but it may well be worth the effort if it results in you having more cash-in-hand to bargain with when you then go to buy your next car.
Warranties
Finally, if a warranty is being offered with the car, check what the warranty covers (parts, labour, or both parts and labour), and for how long it lasts.
Make sure to get details of any warranty in writing.
Remember, a warranty can save you money if anything goes wrong, so ensure you receive the maximum benefits to which you are entitled.