Motors: It's buying time again but be careful out there

Thinking of buying a new car in 2015? Well you are not alone. In fact, you are probably in the company of at least 100,000 other people, which makes you part of a headline-grabbing group, the first six-figure number likely to buy a new car in one year in Ireland since 2008.

That probably means that a fair number of you have not darkened a dealership doorway since 2008. Since then, quite a few things have changed, not least the motor tax system, the proliferation of ever more finely sliced niche models and the nature of car finance. Over the next three weeks, we're going to try and steer you through the best and worst of what's out there.

Of course, if you're thinking of buying new, you're ignoring a basic motoring truth: second-hand cars are still a much better overall value for money buy, so we'll be dealing with that end of things too.

Buying new

However, let’s say you’re buying new and you’re weighing up your options as to what to even look for. The problem is that there is so much more choice out there as car-makers trip over themselves to offer as many different versions of everything as they can.

The fact that an entirely conventional five-door hatchback, the VW Golf, sits on top of the sales charts is indicative of a continuing basic conservatism among Irish car buyers. But the fact that the quasi-SUV Nissan Qashqai is in second place (at the time of writing) shows just how much the market has changed.

So what do you need? Answer that question carefully because your decision at this point will have ramifications later for reliability, resale value and how much you actually enjoy the buying and owning experience. Take your time with this one.

Of course, actually paying for the car is now a major part of that decision as your credit history may well push you towards one of the marques (notably the VW Group, BMW and Renault) that have their own in-house finance arm. They're generally more likely to approve you for a car loan simply because a subsidiary such as Renault Finance exists to hand out money to people for the purpose of buying cars.

You need to take a long, hard look at your finances and calculate, possibly with the help of your friendly neighbourhood accountant or financial adviser, what you can afford and what you can afford if things take a turn for the worse.

All of which brings us to the personal contract purchase (PCP), which has been on the car-buying radar in the US, UK and the rest of Europe for some time but which is a relative newcomer to the Irish market.

A PCP is basically a way for you as an individual to lease a car in the way companies do. The offers look very tempting, with low monthly repayments, but approach them with care.

Emma Toner, marketing manager of Ireland's Peugeot importer Gowan Distributors, says that just because the monthly repayments look low, it doesn't follow that PCP is the most cost-effective way of buying a car.

Monthly costs

“In theory, a PCP tends to be a better value solution simply because the guaranteed minimum future value is subtracted from the finance calculation and the interest and repayments worked out on the remaining balance. This drives the monthly cost downwards – it’s like taking up to a third of the total cost of the vehicle and ignoring it temporarily. Having said that, it does depend on the APR rate. Some offers on straightforward hire purchase finance can be as low as 0 per cent, so it depends on the PCP APR rate in comparison to the straight forward HP APR rate.”

It can be confusing, but you need to bear in mind that not all finance offers are the same.

You also need to think about condition and mileage. As a PCP is essentially a lease deal, it’s similar to hiring a car. And just as hire car companies will make you pay for every scratch and stain when you return it, you need to pay careful attention to the fine print in a PCP agreement.

There are clauses, especially with regard to going over agreed mileage limits and to the condition of the car. There are financial penalties for not looking after your PCP car.

While there are some PCP deals available for second-hand cars, generally speaking once it already has a number plate, you’re back into the area of hire purchase and credit union loans. This is not necessarily a bad thing. At least if you can negotiate a decent car loan rate, you have the advantage of shopping with cash in hand. You also own the vehicle from day one, which is a pleasant feeling.

Second-hand option

If you are going the second-hand route, you should buy from a dealer who is registered with the Society of the Irish Motor Industry or a franchised main dealer.

There are too many dodgy cars out there to take the risk, and given the fact that many dealers now offer decent one- or two-year warranties on used or nearly new cars, the peace of mind is well worth the extra outlay on day one.

Finally, there’s the change of ownership process. If you haven’t been in the buying market for a while, you may still think that this is all done through your local tax office. It isn’t, at least not for vehicles registered after January 1993.

Nowadays everything is done through the Department of Transport office in Shannon, so that’s where you need to be heading (in an internet sense, not a physical one) to get the necessary forms.

Of course, if you’re buying from a dealer, all this will be taken care of, but it is worth remembering if you’re selling your own car privately.

In the coming weeks, we’ll look at what you need to do to keep your insurance costs under control, why diesel isn’t all it’s cracked up to be and why paying too much attention to the motor tax rate can actually end up costing you money.