How to Buy a Car
4 Min Read | Published: 18 June 2023
Updated: 16 April 2025
Written by American Express
Have you been wondering ‘how to buy a car’? Buying a car doesn't need to be a complicated process. Here are some things to keep in mind during your buying journey, breaking down the steps you can follow, from research to purchase.
- Know your budget. Think about how much you can afford to spend each month and how much you can pay up front.
- …and your credit score. Having a good credit score can help you secure the best financing and cashback deal when buying a new car.
- Think about finance and running costs. Some to keep in mind are monthly payments, interest charges and deposits, as well as insurance, fuel consumption, servicing, and maintenance costs.
- Decide if you’re buying a new or a used car. The former comes with a warranty and personalised features whereas the latter is cheaper and retains its value better.
- Do your research. Read press and customer reviews to find out more about the vehicle you’re interested in, checking its different features and tech. Also, compare prices for similar cars to find the best option for you.
- Sustainability. What will the car be used for? Think about the driving conditions of the journeys you’ll make to pick the right engine size and decide on the necessary features.
What will you be using your car for? Do you only drive for short school runs or trips to the shops, or are you regularly travelling long distances on the motorway? Think about your driving needs to pick the right engine size and decide on the necessary features.
When it comes to new or used, buying new means you know the car’s history and can customise it to your tastes. Plus, it’s less likely to need repairs than an older vehicle and under the current legislation it doesn’t need an MOT (Ministry of Transport) test for the first three years.
However, new cars tend to lose almost half their value in the first three years. This means a used car is typically far better value for money – even if it’s just one year old, it will be a lot cheaper than new.
1
Book a test drive
To find out more about the car and if it’s suitable for you, contact the dealer to arrange a viewing and a test drive. When you test drive, remember to thoroughly inspect the vehicle to check comfort and visibility or flag any potential problems.
2
Agree purchase price and deposit amount
Be sure to focus on interest rate, length of contract and all other necessary payments and fees.
3
Check the terms and conditions
Before signing any important documents, make sure you understand all the details and ask any potential questions. Double check the payment dates to ensure there are no errors.
4
Check the manufacturer's warranty
Further, check if the dealer offers an additional one. Also ask what features are standard or can be added.
5
Trade in your old car
If possible, trade-in your old car. This can make buying your new one less expensive.
6
Arrange the details of your collection day
Make sure you have car insurance and pay your balance.
Cash
Have enough savings? Use it to own a new or used car outright and avoid interest and charges. Make sure you don’t use all your savings – it’s important to keep an emergency fund.
Credit card
You can consider using a credit card. This could be your American Express® Card if you have one, to earn reward points or cashback, on the condition that you pay off your balance in full when your statement comes.
Be cautious with this option – and ensure you are confident that you can make the monthly payments and that you are familiar with your credit card provider's APR rates and T&Cs. Representative Card: The American Express® Preferred Rewards Gold Credit Card Representative APR: 87.3%. APR variable.
Personal loan
Compare available deals and their interest rates to understand if this is the right option for you.
Hire Purchase (HP) plans
These give you the opportunity to pay an initial deposit and then make a series of monthly payments, allowing you to buy a car with your last instalment.
Personal Contract Purchase (PCP)
This would enable you to pay a deposit and then make monthly repayments for a few years. When your agreement ends you have various options, such as making a balloon payment to purchase the car outright or giving it back to the dealer, paying nothing.
Conditional sale
This is similar to hire purchase plan but usually has higher monthly payments and doesn’t include a fee at the end of the agreement.
Make sure it’s in a good condition. Examine the electrics (air conditioning, headlights, locks, etc), tyres, upholstery, and bonnet for any issues.
Also check the vehicle’s service history, if it has any modifications, its current mileage and whether it has a spare key. Remember to ask for essential documents such as the V5C registration and MOT certificates.
Please remember to spend responsibly and only buy what you can afford to repay. If you have an American Express Credit Card, you won’t pay any interest on purchases if you pay off your balance in full every month by the payment due date. If you are just making your minimum payment on a Credit Card, it will take you longer to clear your balance. If you have an American Express Charge Card, please refer to your current Cardmember agreement for payment details. You can find information about managing your Account in our online Help Centre.
Find the Amex® Card that fits your lifestyle and see what other benefits await year-round.