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A guide to buying your first car

Make sure you’ve registered your vehicle and sorted out your car tax and insurance before you hit the road. 
 
Here are a few tips on how you might get a cheaper first car insurance policy and how to successfully register your new ride. 

Make sure you’ve registered your vehicle and sorted out your car tax and insurance before you hit the road. 
 
Here are a few tips on how you might get a cheaper first car insurance policy and how to successfully register your new ride. 

Daniel Hutson
From the Motor team
15
minute read
Do you know someone who could benefit from this article?
Posted 12 NOVEMBER 2020

A guide to buying your first car

Buying your first car can be an exciting time, but there’s a lot to think about for a first-time buyer. Between your family telling you one thing, your friends another and the internet something else, buying a car can also feel a bit daunting.

To help pick your way through it all and find the right car for you at a good price, we’ve put together some top tips.

Where should I buy my first car?

Where you buy your car is something that’s getting easier and easier. For both new and used cars, there are plenty of dealers available that you can find online. These can either be the official manufacturer dealerships, or the selection of third-party dealers who work with them.

If you’re buying used, there are even more options. Sites like Auto Trader have an incredible range of hundreds of thousands of cars to choose from. While that might seem overwhelming, you can quickly filter it down to the makes and models you’re interested in.

Then of course you have private sellers. These can be more of a risk, as you don’t always know if what you’re getting is the real deal. But, if you feel confident, and either know your stuff already, or are willing to put in the time and research, there’s no reason you can’t get a great deal there either.

How do I choose a safe first car?

Perhaps obvious, newer cars usually have the latest safety technology built in. These days, things like airbags and anti-lock brakes come as standard, but cars have upped their game by quite a lot since then. An example of this is electronic stability control. This handy bit of tech allows the car to step in and help you regain control when it senses you’re losing grip on the road. Since 2014, this has been a requirement for all new cars, so you may want to look at a model no older than then.

There’s more than just fancy tech though. Let’s literally get down to the nuts and bolts of it, because those things can make a difference, too. You want a car that’s well made. The structure of a car can make a big difference to its safety. Sportier cars are designed to be light and fast, but that may mean they have all the strength of a cardboard box, so, if you want something with a higher safety rating, you may want to reconsider.

Euro NCAP (New Car Assessment Programme) is an organisation which tests cars for their safety. By putting them through a series of incredibly thorough tests (read: crashing them a lot), they assign each model a safety rating system. Simply put, five stars is the best, so look for a Euro NCAP rating when shopping around.

Of course, all the safety gear in the world doesn’t make up for an unsafe driver. Make sure that you’re alert at all times and drive with care. Don’t be like those people you hear about who drove down a motorway while asleep because ‘the car was on autopilot’.

To get an idea of what’s working for everyone else, take a look at the most popular first cars driven by Compare the Market customers.

Should I buy a new or a used car as my first car?

Buying a new or used car can be a tricky decision, because they each have significant pros and cons. Here’s what you should know about buying a new or used car:

Advantages of buying a new car:

  • Fresh off the production line – you shouldn’t have any issues and you’ll get the latest features and technology.
  • Warranties – a car warranty will cover you for any mechanical faults, offering free repairs. Warranty lengths vary, but three years is common, although some, such as Kia, go up to seven years.
  • Customisation – with a new car, you’ll have the option to select certain features, add-ons and personal preferences, such as the colour.

Disadvantages of buying a new car:

  • More expensive – bit of an obvious one, but those fancy new features don’t come cheap.
  • They quickly lose value – you may have heard it before, but a new car loses significant value the moment you drive it away from the dealer. Some cars lose as much as 60% of their value by the end of their third year.
  • More expensive to insure – if the car is more valuable, that’ll be a big factor when getting insurance.

Advantages of buying a used car:

  • They can be much cheaper – like we said earlier, cars quickly lose their value. If you buy a car that’s three years old, you could save as much as 60% from when it was new.
  • Lots of options – the used car market is massive, so there’s always someone out there with the make and model you’re after, which means you can compare and find the right one for you and your budget.
  • It’s normally ready to go – once you’ve settled on a used car, you can drive it away once the paperwork’s done. With a new car, you might end up having to wait around for it to be built or delivered.

Disadvantages of buying a used car:

  • Reliability – this is the big one. If you can’t access a car’s history, that can be a red flag. If you’ve got a friend or family member who knows a thing or two about cars, take them along with you to check it out and hopefully avoid buying anything dodgy.
  • No warranty – without a warranty, you’ll have to foot the bill for any mechanical work that needs to be carried out, which can be expensive. Some used car dealers will offer their own warranty, so be on the lookout for these.
  • Less customisation – while there might be plenty of used cars on the market, you won’t be able to tailor them exactly how you’d want them. You’ll simply have to make do with what’s available.

How much should I pay for my first car?

How much you pay for your first car is going to be unique to you and your financial situation. What might be a bargain to one person, could be completely over the top for someone else. The most important thing is that you pick a budget that suits you and then stick to it. Don’t get caught up in all the fancy talk of salespeople and special offers. Go into it knowing what you can afford and don’t stretch yourself too thinly.

That’s because, it’s not just the car you’re paying for. Yes, the car is obviously the main thing, but you need to think about all the extra costs that come with it:

  • Car insurance – the more expensive the car is to buy, you can bet that it’ll cost more to insure.
  • Road tax – unless the car you buy is exempt from road tax, you’ll need to factor this into your car costs.
  • MOTs and services – and it’s not just the tests and services, it’s the cost of repairs that can take you by surprise.
  • Fuel – you won’t be getting very far without it, and a full tank can easily cost you £50. How long will that last you?
  • Wear and tear – things like new tyres are the sort of thing that pop up once in a while and pinch £50-100 out of your account. Make sure you’re ready for it.

With all these extra expenses, you need to make sure that you’ve not spent everything you’ve got on just getting the car. Running a car is an ongoing expense that can surprise you each year. While you can’t plan for everything, just make sure that you’re as prepared as possible.

First car financing options

If you’re thinking about buying your first car on finance, there are a few options available to you:

  • Hire purchase (HP) – this is the traditional option. You simply spread the cost of the car over a fixed period, on a fixed interest rate. Once you’ve made all your payments, the car is yours to keep.
  • Personal Contract Purchase (PCP) – this finance option is based around the car’s depreciation, rather than its total value. You’ll make a series of monthly payments for a fixed term, followed by a ‘balloon’ payment at the end, officially known as the Guaranteed Minimum Future Value (GMFV). If you’d rather not make this balloon payment, you can simply give the car back, at no charge, or take out a brand-new agreement.
  • A personal loan – getting a finance option outside of your car dealer can be a cheaper option for some. It can also offer great flexibility, allowing you to borrow over a period of up to seven years, and choose from a selection of providers who might offer lower APRs than car dealers.
  • A credit card – probably the least common method on our list, buying a car on a credit card is possible, but you should be careful. If you can get a credit card with a 0% rate, this could be a great option for you, so long as you understand your credit limit and repay the amount owed before the interest-free period ends.

Please note: You must be a UK resident aged 18 or over to apply for credit. Credit will be subject to status and eligibility.

How to get a good deal on your first car

Because we don’t buy cars regularly, it can be hard to know what good value is. This is even more true for buying your first car. To help you get a better deal, here are some things to keep in mind:

  • Have a budget in mind and stick to it – you’ll probably know what you can and can’t afford, so do your sums, work out what you can realistically pay and stick to it. Don’t get distracted by fancy special offers or silver-tongued salespeople, you’ll probably regret it.
  • Do your research – go online and have a look at what’s available. There are hundreds of thousands of cars on the market, both new and used, so get yourself on the various websites to have a look at how far your money can go.
  • Learn to negotiate – I know as Brits it can seem almost against our very nature to haggle, but this can make a huge difference. Think back to any market you’ve been to on holiday, you’ve got to be confident and know what you’re after. After all, if you don’t ask, you don’t get, and you can always walk away if you don’t get the deal you’re after. In fact, threatening to walk away can be one of your best negotiation tactics.

What do I need to do before hitting the road?

Once you’ve found the right car, watched the salesperson perform their song and dance, and gone through all that paperwork, you’re probably excited (or perhaps just relieved) to walk out the door with your first set of car keys.

However, there’s a little bit more to do before you get behind the wheel in your new car. We know it sounds like a pain, but it’ll all be worth it when you finally get out there. So, the next things you’ll need to do are register the vehicle, take care of vehicle tax, and get car insurance. Don’t worry, we can help you with that, too.

How do I register my new car?

If you’re buying your car brand new, you may find that the dealer will register the car for you. That’s one less thing to worry about. You should then receive a V5C registration certificate in the post, which is usually referred to as the ‘log book’. If the dealer doesn’t do it for you, don’t worry, you can do it yourself via the DVLA website (www.gov.uk) or you can visit the Post Office.

If you’re buying your car second-hand, the process is a bit more complicated. The seller needs to complete section 6 of his or her V5C form. This is called ‘new keeper or new name/new address details’. Both you and the seller then need to sign section 8. Finally, they should fill in section 10 ‘new keeper supplement’ and you take this section away with you.

After that, they pop the amended V5C form to the DVLA in the post and you should receive a new one in return.

This can take anything from two to four weeks, so don’t panic if it doesn’t arrive straight away. If it still hasn’t arrived after four weeks, you can find a V62 form called ‘Application for a vehicle registration certificate’ on either the DVLA website or in a Post Office. If you send this, along with the V5C supplement that you received from the seller, it will prevent you having to pay a new registration fee.

How do I apply for vehicle tax?

You can apply for vehicle tax online via the DVLA website with either your new V5C form or the section 10 slip of the V5C you were given by the seller. Entering these details along with the vehicle registration will allow you to get your tax in place. For the future, it’s a good idea to add a recurring reminder to your phone’s calendar, so you always know when your tax, insurance and MOT are due. 

Why is first car insurance typically more expensive? 

Insurance providers decide on their premium prices by looking at the risk posed by each category of drivers. Unfortunately, statistically, young drivers of a student age are far more likely to be involved in an accident than drivers over the age of 25. In fact, just under a quarter of all 18-24 year olds crash within two years of getting their driver’s licence.  

Also, remember that the car itself might be expensive to insure, so it’s worth checking out our guide to the cheapest cars to insure.

Furthermore, AA research shows that while one in eight British drivers are under the age of 25, they account for a quarter of all accidents.

When should I buy car insurance?

As a new driver, you can buy car insurance whenever you’re ready. Getting covered is a pretty quick process, so you might even be able to get covered for the very next day. Once you know which car you’re buying, get yourself insured, otherwise you won’t be able to legally drive it home. Some car dealers will sort you out with a temporary insurance, just to get you started, but you should check this first. Take the time to shop around if you’re looking for the best car insurance quote possible. That’s where we come in.

How can I get the cheapest insurance quote for a first car?

While you can find more information on our new drivers’ guide, here are some ways you may be able to get cheaper car insurance as a new driver:

  • Comparing first car insurance quotes – you might not want to go with the first insurance quote that you find. By comparing various insurance providers with us you could get a more competitive price.
  • Choose the car that suits you best – the market value and type of car you buy could significantly affect the premium you’ll pay.
  • Increasing your voluntary excess – in insurance speak, your policy excess means the amount of money that you would need to pay in the event of any damage to your car before your insurance policy kicks in. There are a few sorts of excess. The insurance provider may set a compulsory excess, but there’s also usually an additional voluntary excess on top.
  • Adding security features – improving security on your vehicle might help lower your premium. Even something as simple as an industry-approved steering wheel lock may make a difference. If you can afford it, investing in an immobiliser or alarm might be an option. If you have the option, parking on a drive could also help to lower your premium.
  • Avoid modifying your car – while you may love the idea of modifying and adding extras to your car, insurance providers don’t tend to be so keen. They want you to stick to your factory specifications and could refuse to even quote you a price. Those that will insure you, could charge you more.
  • Restrict how much you drive – the amount of time you’re on the road obviously reduces your risk and, with it, possibly your premium too. Most insurance providers will ask you for a mileage limit, so set this as low as you think you can comfortably achieve. Just make sure you’re being truthful – if you make a claim and you’ve considerably underestimated your mileage, you could end up with a void policy.
  • Driving well – if you make sure you drive well from day one, it could lead to lower premiums. Your premium will increase if you start to get penalty points or if you have an accident.

Is telematics insurance a good idea for first cars?

If you’re a careful driver, then yes, definitely. Telematics car insurance involves the use of a black box, a gadget placed in the car, or an app for your phone that relays details of how you’re driving to your insurance provider. If you drive well, they could reward you with lower premiums.

We know that insuring your vehicle for the first time is expensive. Compare car insurance in minutes to see if you can find a great deal.

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