How to get cash for your old bangers
With plummeting prices and scrappage deals, new cars now cost far less than they did a few years ago, writes Louise McBride
IF you've cash in the bank, there's never been a better time to buy a car. Anxious car dealers are doing their utmost to get customers through the door -- and scrappage deals could also knock a few grand off the price of your dream vehicle.
GET CASH FOR SCRAP
Under the Government's car scrappage scheme, which runs until the end of this year, you can get up to €1,500 off the price of a new car if you scrap your old car.
The €1,500 discount is taken off the vehicle registration tax (VRT) on your new car -- VRT is usually built into the sale price. To qualify for the government scheme, the car you're scrapping must have been registered for the first time at least 10 years ago. It must also be scrapped 60 days before or after your new car is registered -- as long as the date of scrappage is after December 9, 2009.
Another condition of the scheme is that the car you're buying cannot emit more than 140g of carbon dioxide per kilometre. For more details on the scrappage scheme, visit www.revenue.ie/en/tax/vrt/faqs-scrappage-scheme.html.
In addition to the government scheme, a number of motor groups also offer scrappage schemes. Renault pays €1,500 scrappage if you buy a new Renault from a Renault dealer before the end of March and the car you're scrapping is at least eight years old. Renault also offers a trade-in allowance of up to €3,300 -- so between the government scrappage, and the Renault scrappage scheme and trade-in allowance, you could get up to €6,300 off the price of a new car.
Windsor Motors offers up to €2,500 scrappage on new and used Nissans -- or up to €4,000 if you also qualify for the government scrappage scheme. If buying a 1.6 litre SVE Nissan Qashqai (petrol), both scrappage schemes could knock €4,000 off the price. If buying certain 2010 models of the Nissan Micra, Tiida or Note, you'll get total scrappage of €3,000.
Remember, if your car is a fancy model which is in good nick you could get more money by selling it privately than by sending it to the scrapheap.
DEMAND A DISCOUNT
Don't walk into a car dealer and accept the first price you get for a car -- demand a discount.
An Opel Astra will normally set you back at least €20,000. Windsor's Opel dealers are offering €4,000 off the price of certain Opel Astras. Toyota is offering 10 per cent off the price of new Corollas (petrol engine).
CASH IN ON DEFLATION
The price of many cars has plummeted over the last two years. In January 2008, you would have paid €123,000 for a new 3.6-litre Range Rover TDV8 Vogue, according to the Society of the Irish Motor Industry (SIMI). Today, you'll pay €109,730. Two years ago, the price of another Range Rover, the 3.6-litre TDV8 HSE, was €106,400. Today, you'll get one for €99,765.
You'll even save a grand or two on smaller cars. In January 2008, you would have paid €15,190 for the 1-litre Toyota Yaris VVT-i 3-door Terra, according to SIMI. Today, you'll pay about €14,395.
BID AT AN AUCTION
You could snap up a car at auction for almost half of what you'd pay elsewhere. A 2005 Mercedes C180 was recently sold for €8,500 at Merlin Car Auctions -- its normal retail price is about €14,000, according to the firm's managing director, David Byrne. A 2007 Toyota Avensis sold for €8,000 at another auction, about €4,500 less than its normal retail price, and a 2005 Mini Cooper sold for €7,000 compared to its normal price of €13,300.
In late January, about 250 cars were sold by the liquidator for car dealer EP Mooney. "Everything sold for between 15 and 20 per cent less than what you'd pay at retail," said Kieron Gammell, an auctioneer with eauctions.ie which was involved in the auction.
Do your homework before buying at auction, though. Make sure you know exactly how much you'd get a particular car at a dealer for -- and whether the auction price is the big bargain it's being played up to be. If you spend tens of thousands of euro on what you think is a bargain car but you later find out it is completely dodgy, you will have little or no comeback.
Cars are generally sold as seen at auction and that includes any faults and outstanding loans or hire purchase agreements. "It really is up to the buyer to do their own homework," said Gammell.
Before buying a second-hand car at auction, ring High Purchase Information on 01-2600805 and check if there are any hire purchase agreements outstanding on the car.
GET A CHEAP LOAN FROM YOUR DEALER
The cheapest way to buy a car is with cash so if you've got enough savings and have struck a good deal for a car, don't be conned into taking out a hire purchase agreement or loan to buy it. If you have to borrow money, you could get a cheaper loan from your car dealer or credit union than your bank. Some credit unions charge less than six per cent interest on loans.
Some car dealers offer interest-free credit on certain cars. For example, Windsor Motors offers interest-free loans for up to three years on 2010 Opel models -- but you must pay a 50 per cent deposit off the price of the car to get that finance. Windsor also offers car finance for 2010 Chevrolet models at a rate of 5.9 per cent interest.
Renault is offering car finance at an interest rate of 5.9 per cent over one, two, three, four and five years. If you're taking out a five-year loan of €8,990 to buy the Renault Clio Royal Eco (see panel), your monthly repayments work out at €173.11 and the total cost of the loan comes to €1,397 after five years. So in total, you'll have paid €10,387 for the car. However, if you take out a five-year car loan of €8,990 with AIB, the interest rate charged will be either a variable rate of 12.1 per cent or a fixed rate of 12.62 per cent. Under the variable rate of 12.1 per cent, your monthly repayments work out at about €198 and the total cost of the loan comes to €2,866 after five years. So you'll have paid almost €11,900 for the car instead of €10,387.
Ulster Bank charges a fixed interest rate of 10.5 per cent on a personal loan of €8,990. The monthly repayments under that rate work out at about €191, which brings the total cost of credit after five years to €2,478.
If borrowing more than €7,000 under Bank of Ireland's hire purchase package, the interest rate is 7.6 per cent.
Bank of Ireland charges a fixed interest rate of 11.5 per cent on car loans of between €5,000 and €6,999. Permanent TSB has a fixed interest rate of 8.9 per cent for new cars bought under hire purchase or 9.9 per cent for second-hand cars.
Before signing any car finance agreement, understand exactly how it works. If it's an interest-free loan, find out what kind of interest rate you'll get hit with if you don't repay the loan within a certain time. With hire purchase, the finance company may have the right to repossess your car if you run into difficulties with repayments.