Cut the cost of buying a car

Buying and running a car is an expensive business. But, as Tim Bennett explains, there are plenty of ways to make it a more affordable experience.

Everyone knows that new cars shed pounds fast. The average car drops 20% in value on leaving the forecourt, and loses up to a third of its list price within three months. Just a year after buying, the owner of a Fiat Grande Punto 1.2 Active, for example, would struggle to salvage 50% of the new price, according to Parker's. And that's by no means the worst offender.

So what can you do about it? One option being pushed just now is guaranteed asset protection insurance or 'gap'. This plays on the fear of crashing a car or having it stolen soon after buying it, only to find your car insurance covers solely the replacement cost at the time of the accident, rather than the purchase date. That means that driving your shiny new motor off the forecourt and into a lamp post could cost you thousands of pounds. So for a monthly premium you can buy a gap policy that pays out the difference as a lump sum.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.