The ten golden rules for buying a car

Car buying advice Car finance advice
Follow The Car Expert's Ten Golden Rules for Buying a Car

Rule 3. Read and understand everything before you sign anything

As explained in Rule 1, signing a contract means you are legally committing yourself to everything it states. Yet a huge number of car buyers do not read the contracts for cars or car finance before signing. Or they don’t understand exactly what something means, but sign anyway because they’re too embarrassed to ask.

All contracts have terms and conditions, which may have implications for your ownership of the car, and you are legally bound to them once you sign the contract. So if you are not sure what you are getting yourself into, don’t sign.

Ask questions – as many as you like. If you don’t understand the answer, ask again. Ask someone else to explain it. If you’re not happy with the answers, walk away and get some answers elsewhere, even if you just need reassurance that you’re not being stupid.

It’s not uncommon for the purchase contract for a car to look different to the quotation you were given, or from what was originally advertised.

Compare them closely, and if there’s anything that doesn’t match, ask why. It may be an error, or the dealer may be trying to sneak something past you without you noticing. Is the finance rate still the same as what was originally quoted, or has that mysteriously gone up?

Next page: Who’s in charge here?

Read every piece of paper before you sign it. If you don't understand anything, ask.

Stuart Masson

Stuart is the Editor of The Car Expert, which he founded in 2011, and our new sister site The Van Expert. Originally from Australia, Stuart has had a passion for cars and the car industry for over thirty years. He spent a decade in automotive retail, and now works tirelessly to help car buyers by providing independent and impartial advice.

12 Comments

  1. hi stuart ,
    is it right that a balloon payment on a bmw new car purchase deal , cannot be reduced by early repayment sums . ?we were told by their salesmen that we could reduce the balloon payment by early overpayments. how much interest is included in the balloon payment,? would it typically be more than the interest accruing in our regular monthly payment on a pcp deal?

    Reply
    • Stuart Masson

      Hi Robert. Normally no, the balloon amount at the end of the term is fixed as it represents the predicted value of the car at that time. Usually overpayments will reduce the monthly payment amount, which includes the interest payable on the balloon. Some finance companies will allow you to use overpayments to shorten the term, but this is less common.

      You pay the same APR on the balloon as you do on the monthly payments. However, you are paying the interest for the whole loan amount (inc. balloon) up-front. Making overpayments will reduce the total amount of interest you pay as you are reducing the amount of debt outstanding.

  2. Hi Stuart, I’m considering taking a PCP out on a brand new Audi S3, I have a considerable deposit that I can put down, 12k to be exact which makes the monthly payments easily affordable but my concern is, that after the 3 or 4 year payment term comes to an end, the difference between the GFV and what the dealership actually values the car at at the time of trade in, the actual deposit I’ll have to put towards another PCP deal will be considerably less and the payments will be considerably more. So 12k inital deposit turns into 2k after 3 years so in effect 10k lost! Are people aware of this?

    Reply
    • Stuart Masson

      Hi Rob. Always assume that you will have no equity over and above the GMFV. If you do, then great. But never start counting equity in advance.

      It’s not so much as “£10K lost” as “£12K of cash lost now but lower monthly payments for three years”. If you put no deposit in, your monthly payments would be much higher and you would also be paying interest on all that extra money borrowed, so your Total Amount Payable would go up.

      (But you are right in that most people seem to be unaware of this; they get sucked into a PCP and then get to the end of it and realised they are screwed when they want to change for another similar car)

  3. These are all really great advice stuart! People really need to bare all of these things in mind.

    Reply
  4. I have a 2016 ford ka which i got last may, i would like to takr it back to garage, how much would i loose on a 48 months finance plan

    Reply
    • Stuart Masson

      Hi Angela. Probably about a third of the car’s value, at a very rough guess. Have a read of our article on new car depreciation for more information.

  5. Hi Stuart I recently sighted a paper at BMW for them to check my finance no handover paper and paid 500 does that mean I am legally binded to the car also the invoice price is much higher than the actual price of car is that correct?

    Reply
    • Stuart Masson

      Hi Jasmin. If you signed a form for them to “check your finance”, this was almost certainly a finance application. The finance company generally does not check your credit score or review your financial situation until they have a formal application – it’s not in their interests and it’s certainly not in yours.

      If you have signed a form and paid the dealer £500, they consider you to have bought the car.

      The invoice price may be different from the advertised price of the car, but there should be a good reason why. If it’s a used car, the advertised price won’t include road tax. Dealers will often also try to throw in an admin fee that may have been mentioned in very small print in the advertisement or on the car’s window display, plus they will almost always try to sell you extras like GAP insurance and other crap that you don’t need or want. Often they will assumptively include this in the finance quotation and hope you won’t demand they remove it later on.

  6. Thanks for the helpful advice Stuart! I’m looking into buying my first car this year- any pointers?

    Reply
  7. Hi
    I am 2 years and 2 months in to a 36mth pcp on a skoda citigo. I have kept up my payments of £124.70 per month this totals £2750 ( approx ) . I want to give up my PCP now and don’t understand if I will have to pay any more money as I have paid for more than 50% of the 3 years could I hand it back without a penalty ?
    Thanks

    Reply
    • Stuart Masson

      Hi Jayne. The 50% point refers to the Total Amount Payable, which is the total of your deposit, the monthly payments, the final payment (GMFV) and any fees and charges. It is not 50% of the term.

      For more information, have a read of our comprehensive guide to voluntarily terminating a PCP.

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