BUYING a new car is one of the most stressful things Brits will do, causing more anxiety than planning a wedding or moving house.
And it seems motorists have reason to be anxious about the process, with an investigation revealing buyers are overpaying significantly on finance deals.
Earlier this year, the Financial Conduct Authority found drivers buying cars on credit often pay £1,100 too much in interest, with dealers and brokers deliberately inflating interest rates to bag higher commission.
The finance watchdog revealed widespread use of such commission models – where fees are linked to interest payments – can lead to “conflicts of interest” that are not adequately controlled by lenders.
On a £10,000 loan, the standard interest should be around £2,300 – but some dealers are charging £3,400, showing an increase of nearly 50 per cent.
To help combat the problem, Confused.com put together tips for buyers to ensure they aren’t overcharged when negotiating finance deals.
How to get the best deal on your new car
After discovering buying a car can be one of the most stressful things Brits will do, Confused.com motoring editor, Amanda Stretton, and leading expert negotiator Steve Jones, from Focal Point Negotiation, revealed their top tips on how to negotiate a good deal:
- Plan ahead: If you know what you should be paying, you’re less likely to accept a bad deal. Make sure you go into the dealership with a ballpark estimate for the value of the car. Research different options, quotes and terminology on finance packages beforehand, too. Remember some dealers will be looking to make their money there, rather than on the price of the vehicle, so know what you should be paying for both.
- Be realistic with your budget: Set yourself a realistic goal of what you’d like to pay for a car once you know its value. Always start a negotiation by asking for a figure lower than what you’d like to pay, then slowly increase your price and have the price you would like as your ‘final offer’.
- Go in with options: Check a number of dealers before you start to negotiate, and don’t get emotionally attached to one particular car. If the negotiation becomes more about getting hold of ‘that specific car’, it gives the dealer the upper hand.
- Pick your time: Don’t be disheartened if somebody says no to your offer, and stick to the amount you’ve decided you can pay. You may even want to consider visiting or following up with the dealership towards the end of the day, as they might be more inclined to close a sale right before they close.
- Add ons: If the dealer can’t move on price, ask them to add more instead. Things like extended servicing, metallic paint and free insurance can add value to your deal in other ways.
- Ask plenty of questions: Check details like tyres, mileage, paintwork, alloys, interior and electrics and don’t be afraid to use them as bargaining chips if they aren’t up to scratch. You can even do a quick online HPI (vehicle history) check while at the dealership to check the car has no outstanding finance, or hasn’t been stolen or written off in the past.
- Be flexible: Remember a successful negotiation is not about a win-lose scenario but a win-win one. Understand the pressure from the dealer’s side and try to meet them halfway where you can.
- Remain calm: Don’t let the dealer know if you’re confused about terminology or your options. Be confident and take your time to properly think things through before you commit to anything.
As is the case with any negotiating, doing your research beforehand and have a good understanding of your options makes a big difference to your final deal when buying a car.
Setting a budget, being confident and asking plenty of questions will also help ensure you left overpaying.
The advice follows a scientific investigation by the comparison website to analyse the impact of buying a car on cortisol levels (the stress hormone).
It found stress levels can reach more than double the recommended average while visiting a car dealership.
Those trying to buy a new motor claimed feeling nervous during their visit to the dealership, and experienced hyperventilating, sweating, a lack of concentration and increased heart rate.
More than half of Brits find the process more stressful than going to the dentist, while over a third claim it causes more anxiety than planning a wedding or moving house.
And around 13 per cent of motorists said they didn’t try to negotiate a better deal on their car because they found it overwhelming, meaning some 1.6million British drivers could have overpaid for their vehicle.
Amanda Stretton, Motoring Editor at Confused.com, said: “The thought of having to walk into a car dealership and negotiate is enough to put the most experienced haggler on pins.
“Many of us let confusing jargon and our nerves get the better of us, meaning we walk away with a bad deal.
“The key is preparation. Getting your finance secured beforehand by comparing plans online can put you in a better position when it comes to negotiating.
“More competitive finance deals could be available online, with savings of up to £1,167 to be made at Confused.com.
“And being clear on your haggling tactics can also boost your confidence. For more advice, see what our negotiation expert has to say in our guide to securing the best price when buying a car.”