Buy

Your total car budget should include the purchase price plus ongoing costs. For the purchase, save at least 10% of the car price for initial expenses (insurance, tax, immediate servicing). Monthly running costs typically include: insurance (£50-£150), fuel (£100-£200), tax (£10-£50), and maintenance (£50-£100). As a rule, total car expenses should not exceed 15-20% of your monthly income.

Used cars offer better value for most buyers. New cars lose 40-50% of their value in the first 3 years, while 2-3 year old cars have already absorbed this depreciation. However, new cars come with full manufacturer warranties, no history concerns, and latest safety features. Choose new if you want warranty peace of mind and can afford the depreciation. Choose used if budget is a priority and you can verify the car's history.

Personal Contract Purchase (PCP): Lower monthly payments, balloon payment at end, option to return car, but mileage limits and no ownership until final payment. Hire Purchase (HP): Fixed monthly payments, own car at end, no mileage limits, but higher monthly costs. Personal Loan: Own car immediately, no mileage restrictions, can sell anytime, but higher monthly payments and need good credit. PCP suits those who change cars every 3-4 years, HP suits those wanting eventual ownership, loans suit those who keep cars long-term.

Dealers offer more protection under the Consumer Rights Act 2015, provide warranties, handle paperwork, and allow part-exchange. However, they cost 10-20% more than private sales. Private sellers are cheaper but offer no warranty and limited legal recourse. Choose dealers if you want protection and convenience. Choose private sellers if you have mechanical knowledge, can verify history yourself, and want the lowest price.

Dealer cars: typically 5-15% negotiation room, with 8-10% being realistic for most. Private sales: 10-20% possible, with 12-15% common. Factors increasing negotiation power: car listed 45+ days, faults found during inspection (£500-2,000 deductions), missing service history (15-30% reduction), month-end timing, and competitive market research showing cheaper alternatives.

Essential documents: V5C registration certificate (logbook) with seller details matching ID, valid MOT certificate for cars over 3 years old, service history if claimed, and proof of sale receipt. Never buy without V5C or if seller isn't named on it - likely stolen or finance complications.