The Student Car Buying Guide

student car buying guide

If you’re headed to university and plan on driving in the city, you’ll need a reliable car to get you from A to B. Whether you’re looking at new or used cars, choosing a car can be a stressful experience – but it doesn’t have to be! We’ve put together this helpful guide to car buying for students to help you make your decision.

You may be under a tight budget, but this doesn’t mean your choice has to be strictly limited. There are many affordable car finance options out there and although you may not be eligible for all of them, it’s worth knowing what your options are. You can purchase your vehicle via cash, hire purchase or PCP, all of which provide you with the option to own the car.

1.    Personal Contract Purchase

To finance your vehicle, you could go down the Personal Contract Purchase route. PCP is an affordable way to pay for your car with monthly payments that fit your budget. You will need to have a good credit score to be accepted for finance, but if you are accepted by the finance company, you can put down an optional initial deposit – this isn’t compulsory, and generally, the maximum deposit is 35% of the value of the car. You’ll then pay fixed monthly payments for around two to four years with the option to buy the vehicle at the end of the contract.

When you do come to the end of your finance agreement, you will have three different options. You can hand the vehicle back with no strings attached, you can exchange your vehicle for a new one and start a new finance agreement, or you can pay the optional final payment (the remaining balance) and fully own the car. Some finance companies charge a small purchase fee, but this is generally very small.

2.    Hire Purchase

If you don’t have the cash to buy your car upfront, hire purchase is an attractive option. Similar to PCP, you pay the majority of your car with affordable monthly payments with HP – however there are some differences. Again, you will need a good credit score for finance companies to agree to loan you the money for the car. You’ll also require an initial deposit, followed by fixed monthly payments over a period of one to five years.

The monthly payments for hire purchase cars are usually a little higher than the payments for PCP. This is because when you reach the end of your agreement and all repayments have been made, unlike PCP, there is no balloon payment to be made so that you own the vehicle. With HP, you simply have an optional ‘purchase fee’ which ranges from £0-£200, but not every finance company charge this – this covers the costs of transferring the vehicle into your name. You only have the option to own the car at the end of the agreement; the finance company owns the car until you pay the ‘option to purchase’ fee.

3.    Cash Purchase

If you’ve been dutifully saving your money to buy a car before university, paying the full amount outright is a great option. This way, you pay the full balance upfront, involve no finance companies and not needing to worry about any monthly payments – just one lump sum.

4.    Money Savings Advice

First time car buyers should know that there are a few extra options worth looking into – this could save you money in the long run. Warranty could save you a lot of money in minor repairs – any issues are covered under your warranty, meaning no additional costs for you.

Gap insurance is another smart investment idea for new drivers. This insurance covers the difference in cost between what you paid for your car and the amount your insurance pays out if your car is stolen or written off in an accident. This means you won’t find yourself out of pocket if your insurance company doesn’t cover the full amount of your car. And even for experienced drivers, you never know what’s around the corner – an accident might not be your fault but could still result in your car being written off. Before you sign on the dotted line, remember to check car insurance quotes. Make sure your insurance is affordable before you buy a new car too.

5.    Recommendations

Most student accommodations have limited parking available. Some halls provide parking space, but other student accommodation require permits and you could be limited to parking in a tight double-parked street. You’ll want a reliable and safe car that is compact and able to navigate along small streets, through the local town and fit into smaller parking spaces.

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