Buying a brand new car is easily the most expensive way to get on the road. The biggest hit your wallet will take is depreciation - you'll lose thousands as soon as you drive it away from the showroom. And using finance to buy it will cost you more still.

But there are of course up-sides, so if you're buying new, here are a few ways to cut your costs.

First, thoroughly check out all the deals - not just at your local main dealer for the car you're looking at, but see if you can find another within a reasonable distance and challenge them to do better for you. Just ensure both dealers aren't owned by the same large dealer group.

But there are many other options than just your local dealers. Everyone wants to sell cars these days, even supermarkets, banks and insurance companies. Check out what they can offer to supply direct. There are also many internet sites offering new cars direct at savings off the list price..

Sifting through all the possible sources for the car you want might take a bit of time, but it's easy and you can expect to save several hundred pounds for your effort - probably at least five hundred and potentially considerably more.

Second, never buy on impulse. Might sound obvious, but being tempted just a step or two up the model range by a salesman while doing the deal won't only increase the purchase price but potentially add hundreds to your ownership costs too.

For example, according to What Car magazine, the difference in running costs between a Toyota Yaris 1.0 T2 and 1.33 TR is 3p per mile. Doesn't sound much, but over a likely 3 year ownership covering an average 30,000 miles that's £900 you could have spent on something else.

Using this effect in your favour, moving down the range from your chosen model will save you some serious money every year. The difference in running costs between a Vauxhall Astra 2.0 and the 1.4 model is 6p per mile. The lower purchase price, road tax band plus better fuel economy adding up to a very handy £1,800 saving over a typical 3 yr / 30,000 mile ownership. You might fancy the more punchy 2.0 litre car, but is it really worth it?

Similarly, looking between the different car makers, the running costs of small family cars like the Ford Focus, Citroen C4, Honda Civic and Vauxhall Astra - of similar engine size and specification - varies between 37p and 42p per mile. Choose the right one and you pocket a useful saving.

So study the cold, hard facts of pence-per-mile running costs for the makes and models you like and decide which model specification suits you best before visiting dealers for test drives, and certainly before doing a deal. Don't be easily persuaded out of your decision.

Third, don't be tempted to add lots of 'valuable' optional extras to your car. You'll likely hike the price by thousands, yet only certain extras - like metallic paint, air conditioning, leather seats and sat-nav - will make any difference to the value of your car when you come to sell. Alloys are also a definite plus on mid-range cars upwards. On small cars however, while they'll make a car look a bit special and so easier to sell, alloys won't make much difference to the resale value. Parking sensors and heated seats have also been shown to add value at resale. But don't expect to ever get back what you paid for these options when new.

Fourth, think about road tax. For new cars, tax rates are divided into 13 bands depending on the car's exhaust emissions and range from being free (Band A) for those emitting under 100g/km of CO2 to £435 for those emitting over 255g/km (Band M). Worse, brand new cars with higher emissions are hit with a hiked first year's tax rate - sometimes called 'showroom tax' - which starts to get significantly higher than the standard annual rate for cars emitting over 165g/km of CO2.

Even very similar sizes and types of car can fall very slightly into different tax bands depending on the efficiency of their engines, resulting in a significant extra annual cost. So check the emissions figures for the cars you're considering and add another annual saving by choosing a lower band car. You can see full info about current car tax rates on the Direct.gov website, and find out the emissions rates of cars currently on the market at CarFuelData.org.

Considering these factors and making the right choices could mean you end up with not just a new car but also enough cash left in your pocket for a new telly or a good holiday.

Next page:
cut your finance costs >>