FOR many, buying a car for the first time can be a stressful experience.

Bombarded with well meaning but conflicting opinions, baffled by financial jargon and bereft of unbiased information on the best sources to buy a car from, many buyers would rather take pot luck than spend hours doing dull research into how to land the best deal. It needn’t be that way.

Armed with a short primer on what to look out for and what to expect, there’s no reason why you should catch a cold when it comes to landing your first set of wheels.

The first task is to identify what kind of car you want.

Take into account servicing costs, fuel bills, insurance, road tax and any road tolls you may have to pay. Your final balance available may not be as big as you at first thought.

Modern ‘supermini’ cars like the Ford Fiesta, Citroen C3, Volkswagen Polo and Vauxhall Corsa all offer the sort of space and refinement that our parent’s luxury saloon cars used to offer with the added benefit of low fuel bills, especially if you choose to opt for diesel versions. With the vast majority of cars now available as diesel versions, the savings are plain to see and you’ll get a better price for a diesel when the time comes to sell it on.

FINANCE

You’ll need to understand the difference between good credit and bad credit and realise that not having a pile of cash up front rarely diminishes your bargaining power. When you buy a car in finance, the dealer actually sells the car to the finance company, which, after deducting your deposit, pays the balance to the dealer in a day or so. In addition, dealers usually receive an administration fee from the finance company for the work they do in setting up the account. In short, your local garage will be just as keen to cut a deal, however you choose to pay.

There’s the period of the loan to decide upon too – usually one, two or three years. Obviously, the longer you take to repay, the more interest you’ll end up having to cover.

Now it’s a case of deciding which of the many means of financing is right for you: there are many, often embellished with fancy marketing names. Don’t be put off by those; just ask which of the following categories are available.

Conditional sale

The traditional means of finance. You pay a deposit, followed by the balance plus interest in fixed instalments over a pre-determined contract period. As long as your payments are made on time and you keep the vehicle comprehensively insured and in good condition, then you own it at the end of the contractual period.

Hire purchase

Here, you ‘hire’ the vehicle for a fixed period. During this time, you repay, by instalments, the total cost of the car, plus interest.

At the end of the period, the vehicle remains the property of the finance company unless you pay an extra nominal ‘option to purchase fee’. Personal loan – of the type usually offered by banks, building societies, credit card organisations and some finance companies; there are plenty of options, so shop around.

Depending on your status, you will have the choice of either a secured or unsecured loans. As the name suggests, secured loans require you to offer something, usually your house, as security against the possibility of your defaulting on repayments. This reduction in the lender’s ‘risk’ factor usually makes these a little cheaper.

Credit sales

This is different from a personal loan in that the money is advanced for a specific purpose only, for example, purchase of a vehicle.

You enter the credit sale agreement with the lender, who pays the dealer for the car. You are then the vehicle owner and must pay the lender by equal instalments, including interest.

There is no security for the lender in the vehicle itself. Any remedy against default is with the customer.

Personal lease

Until recently a business option only. However, as a result of recent changes in the VAT laws, it has become a private user’s alternative.

Here, you never actually own the vehicle, so never worry about depreciation. You would normally make an up-front payment – usually equal to three monthly payments – and then make monthly payments over the remaining period, usually one or two years in total. Afterwards, you return the car.

Personal contract purchasefinance schemes

Most of the major franchises now run Personal contract purchase schemes. These programmes offer lower monthly repayments by virtue of the simple fact that you’re not actually paying off the full value of the car.

What’s involved is an agreement, usually of around two years, at the end of which the customer can either trade in the car for a new model or pay a nominal purchase fee to do either of the following:

* Pay the final payment and keep the car

* Return the car to the dealer instead of paying the final rental – providing the car has been maintained in good condition and/or has not exceeded the previously agreed mileage.

This option, which would not be available under normal hire purchase, means that the manufacturer would take the sale price for the final payment and the customer would have nothing more to pay.

The whole thing is based on a programme that enables the major makers to establish a guaranteed residual value for whichever model you choose. All you have to do is to estimate your maximum mileage over the term agreed.

Whichever finance option you decide upon, be clear about the credit charges you’ll be paying. Compare APR figures and if free credit – zero per cent finance is being offered – check that there are no strings attached.

Check the terms of zero per cent finance carefully. The laws of supply and demand dictate that if a car needs to be shifted on the cheap there’s a very good reason why.

While you won’t lose your shirt on air conditioning, metallic paint and a CD stereo, pricey extras like satellite navigation, electric sunroofs and rear parking sensors won’t add too much to the eventual value.

The 1.2-litre S version with comprehensive insurance is always going to be a better bet for a young driver than the 16-valve 1.8 GTi sport version that means you’ll only be able to afford third party insurance.

WHERE TO BUY

Most first time buyers will look no further than their local franchised dealer, and if you want a low-hassle, safe way of buying a car this is still the tops.

With nothing to part exchange, however, you may well find other avenues that can offer savings.

Independent dealers can slash a lot from the sticker price of your chosen new car, but you may have to do a fair amount of phoning and legwork, plus you may have to wait for some time and be prepared to compromise on the exact colour or trim level.

INSURANCE

This is a biggie. If you’re young and have recently passed your driving test, the Association of British Insurers are going to see you as a bad risk and ratchet up the price of a year’s cover.

There’s little to be gained by piggybacking on to a parent’s policy as a named driver as many insurers are wise to this and will not only ramp up the price of your parent’s policy but you’ll also run the risk of ruining their no claims bonus if you have a prang.

The flipside of this is that you will be missing out on building a no-claims discount of your own, so the best thing to do is accept that it may be a few years before you can own something with a high insurance rating and plump for something modest.

There are a few things you can do to help. Certain occupations will ‘load’ your policy and a certain degree of entirely legal vagueness can help when filling in your form.

For example, a sub editor in a newspaper office would see his premium shoot through the roof if he called himself a ‘journalist’, but would remain at far more manageable levels as an ‘office assistant’. Likewise, if you have two places of residence, it could well be beneficial to check which the insurance companies rate as a better bet.

Tread carefully here, as a canny insurance assessor will not be amused to find you registering your car at a property where you are resident for only five per cent of the time.

Get as many quotes as you can – as different companies may well vary wildly in how much they charge. Use one company’s quote to beat another down in price. You’ll often be asked what the best quote you’ve received is.

‘Pass Plus’ is a post-driving test instruction course backed by the Driving Standard Agency designed to help young drivers cope with the reality of driving in all conditions.

There’s no examination but if the instructor is satisfied that you’ve cottoned on, you’ll be issued with a certificate that can slash up to 25 per cent off your insurance premium with companies like Churchill, Direct Line and Norwich Union.