How do Brits pay for a new car?

For many people, owning a car is a must-have for a number of reasons – we rely on our cars to get us to work, see friends and family, and maybe take the odd road trip. It’s also considered a rite of passage for many, from the first moment we are handed the keys to that slightly battered secondhand motor to the day we graduate to something a little more aspirational. In fact, according to new research from Raisin UK, 9% of Britons say their car is their prized possession, with a very honest 3% admitting that they love their car more than their partner (clearly, they’re not wrong when they say we’re a nation of car lovers).

Let’s face it though, buying a car isn’t cheap, especially when you add on additional costs such as insurance, tax and fuel. Buying a car is one of life’s ‘big’ purchases, and for most of us, it will require a little more forward planning and saving up our hard-earned cash before we can afford new wheels.

We’ve done the research to discover how the average Brit pays for a new car, how long it takes to save, and the best ways to make your savings work harder to finance a new motor. So, before you buy your car, make sure you consider these five simple questions.

Why do you want to buy a car?

The reasons for wanting to buy a car are as varied as the different models available to buy, with many of our respondents listing more than one reason, ranging from the practical to the more extravagant.

39% of people in the UK say they simply want to get from A to B, and 28% say they’ll use their car to see friends and family. There’s

no denying that having a car gives you more freedom and flexibility; something that has no doubt become more important during 2020. New jobs and a move to a different city also featured as reasons for people from the UK, whilst 13% of people admitted they simply wanted to buy a car to look good!

What type of car should I buy?

Vauxhall, MINI and Volkswagen were the familiar brands that topped the list of most popular first cars, but you’re sure to have a preferred make and model in mind, whether it’s a reliable family hatchback or a sleek sports car. Perhaps you’re coveting something slightly more premium? For 16% of Brits, the Aston Martin DB5 from James Bond’s Goldfinger is their idea of the most iconic car, followed by the Jaguar E-Type (13%).

Of course, there’s a big difference between your average Ford Fiesta and a vintage Jaguar, and investing in classic cars can be lucrative for some. Our recent research into the best non-monetary investments showed that some premium models, such as the 1989 Porsche 911 Turbo, have doubled their original value (in that case, from £58,376 to £117,259). However, most cars often age without growing in price at all. But hey, even if the value doesn’t rocket, you’ll still be able to enjoy them out on the road!

How long will it take me to save for a car?

If you’re currently saving up for a car, you’re in good company – an estimated 7.5 million Brits are doing the same, and from our research, it takes most people a little while.

For 53% of Brits, it takes anything from six months to five years – that’s some dedication! Of course, saving over the long-term is a wise decision, as the more you can put towards your car, the better, as it will lower the overall cost you end up paying. The average amount Brits put towards the cost is £2,794, with 36% paying even more. How much you need to save will depend on the model and age of the car you would like to buy, so doing some research beforehand will help you understand how much you will need to save.

How will I finance my car?

Of course, deciding you want to buy a car and working out how much you’ll need to save is just the first step. Deciding on how you’re going to finance your new motor is another question. For 58% of our respondents, they planned to buy the car outright – with 21% of those stating that they already had the money to do this. However, for the other 42%, they planned to buy their new car on finance (14%), with a loan (8%) or with a combination of both cash and a loan (14%).

To really maximise your savings, one of the best ways to save for a car is to open a savings account. By now, you’ll know how much you need to save, so you can compare savings accounts to find one that best suits your needs and your savings target. If you’re like 5% of Brits, and simply don’t know how you are going to finance your purchase, opening a savings account is a good option to take advantage of interest rates and start saving as early as possible.

If you’re willing to save for longer, a fixed rate bond with a competitive interest rate could be a good option. Your money will typically be locked away for between one and five years, but you’ll usually benefit from higher rates of interest on your lump sum, and the rate won’t change for the duration of your term.

If you have a date in mind for when you’d like to buy your car, then a notice account gives you the flexibility to withdraw your savings after a set notice period. Alternatively, if you want a completely flexible savings option that allows you to access your money when you need it, an easy access account is a good option.

Should I haggle for a car?

So, you’ve finally done it. You’ve saved enough, and you’re heading to the forecourt to choose your new motor. 37% of people in the UK say they are more likely to haggle with car salesmen (37%) above any other traders. However, if you’re one of the 25% of Brits who say they wouldn’t haggle with anyone, it’s definitely worth a try. Our research showed that the average amount successfully slashed from the asking price amounted to a not-insignificant £505!

One person who is no stranger to bartering over the price of a motor is Shaun Williamson. His most famous role was that of Barry Evans on Eastenders, who owned the Evans & Sons car lot on Albert Square. As a lover of cars in real life too, Shaun knows all about the challenges of buying a first car, and has helped wangle a deal on behalf of his children when they bought their first vehicles. Here are his top tips for haggling:

1. If you don’t like haggling, take someone with you who does! Preferably someone who knows their way around a forecourt, and understands car jargon.
2. Don’t tell the salesman how much you’ve really willing to spend – tell them you can ‘only’ spend less than you’ve brought with you.
3. Find something wrong with the car – even if it’s just that you don’t like the colour!

Boost your car buying power by growing your savings

Our best tip for buying a car is to start saving as soon as possible. With Raisin UK, you can quickly and easily open a savings account that will help you make the most of your money. Compare savings accounts from a variety of banks on our marketplace to find the right option for you.

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