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New car or used car?

If you’re thinking about changing your car – is it wiser to buy new or used?
Conventional financial wisdom has it that used cars generally present better value than used cars. This is because a brand new car has lost a great deal of its value the moment you sign on the dotted line. It is, by definition, immediately second-hand and the value added tax completely seals the deal.

On the whole, it remains true that used cars offer better value for money. But many of us are simply happier buying a brand new car. If you’re one of these people, then there are a few things you should consider in the name of ‘fighting back’ against the additional expense.

First of all, you have peace of mind. If you buy a good quality make of car, then it comes with a legal warranty and if you look after it, it should give you many years of completely trouble-free motoring. You know where it’s been and what it’s been through.

It goes without saying that you should also hunt around for the best possible new car offers you can find. In the current tough economic climate, carmakers and car sellers are having to fight harder for your business, trimming their margins and coming up with all sorts of special offers. So make sure you drive a hard bargain; remember - you can always simply walk away from the deal.

If you are thinking about a new car, consider a hybrid car. Hybrid cars are topping the miles per gallon charts and qualify for subsidies and tax relief in most countries.

Also, these are very much the ‘coming thing’, which suggests you should be able to get a good second-hand price, if you pick the right manufacturer, when you want to trade up in a few years’ time.
Overall, it comes down to personal choice. If it’s all about money – then used cars still have the edge. But if it’s complete peace of mind you’re after, and you can afford it, buy new.

Consider a pension mortgage

If you’re thinking about a new mortgage or a change of mortgage – have you stopped to consider a pension mortgage at all?

Twenty years or so, ago, you heard a lot about pensions mortgages, but they seem to have fallen out of favour in recent years. This is understandable; after all, a pension should be there to provide you with an income in your dotage rather than paying the principal off your mortgage loan.

But it’s that kind of snap judgement that has caused the decline of the pension mortgage and it may not be a fair assessment.

First the basics; a pension mortgage is an interest-only type of mortgage whereby the additional investment plan is in the form of your personal pension.

The personal pension is most usually a stock market-based investment, and it also benefits from both tax relief and tax-free growth. The idea is that the pension pays a tax-free lump sum and a monthly taxable income when you retire. At this stage, the lump sum would usually be used to pay off your mortgage.

As pension contributions can benefit from up to 40% tax relief for higher rate taxpayers, a pension mortgage can be a great idea. Also, it may help force you to pay more into our pension than you otherwise would. And in reality, you’ll probably find other ways to pay off your mortgage premium at the end of the period if you’re a regular saver-investor.

So it may be possible to view the extra pension contributions (which are highly tax-efficient of course) as a kind of bonus payment if you’re sensible and shrewd along the way.

And as people are living longer than ever before, this may be a good thing.

On the downside, there are no absolute guarantees that you’ll have enough to pay off the mortgage at the end if things go badly, but the tax relief helps and you can ramp up your payments when your income allows.

Written by David, a keen financial blogger, who writes about topics ranging from UK Payday loans to insolvency issues.

Replacing your car

People looking to replace their car may think that the best option in today’s financially difficult times is to buy second-hand, and there’s a lot to be said for not paying the premium of driving a new car off a showroom’s forecourt. However, it’s worth looking at the different new car offers available as it’s a really good time to strike a bargain – manufacturers are keener than ever to sell new cars and are offering great incentives to draw customers in.

The incentives vary from different flexible finance deals, insurance deals, packages that include servicing and roadside assistance to straightforward cash back temptations. If you’re in the position to buy new, then you should really put some time into researching which car manufacturers are offering the best deals at the moment.

Many of us still won’t be able to afford to buy new, but there is an absolute wealth of second-hand cars available, some of which seem amazingly good value. Advice to bear in mind if you’re going down the second hand route is to choose a reliable make and model of car. Look at sites like Which Car? to narrow down your choices before you start looking through the ‘for sale’ ads.

Before parting with any cash, if you’re buying from a private seller, it’s really important to get the car checked over by a qualified motor engineer. Although this will cost you around £100 to £150, it’s money well spent if you don’t know much about cars yourself. It may also give you some wiggle room on the price you settle on.

You can also buy second-hand from a car dealer, which means you’ll get the security of somewhere to return if there are any problems with the car, and a guarantee for a certain length of time. People concerned about the impact their car has on the environment and want to drive a hybrid should also check out the second-hand car pages. More second-hand hybrids are available now that the technology has been around for more than ten years.