Even if you can afford to buy new, buying a car second-hand makes a lot of financial sense. This is simply because the initial and largest amount of depreciation has been incurred by the first owner; part of that is due to the additional 20% VAT paid when buying a new vehicle. The VAT can only be claimed back if you are a business user.  Therefore as a secondhand buyer you will enjoy cheaper motoring than would otherwise have been possible. This money you save now can be used for investing elsewhere to help achieve your other financial goals – and that’s the time when you can afford to be more liberal with your spending habits. And don’t think buying second hand means you have to sacrifice buying a decent car – there are plenty of well-priced desirable ones out there.

Firstly because there are bargains to be had buying privately that you don’t get buying from a dealer or garage. It fits the masterMONEYsimply ethos of optimising your cash, and means you can use those saved funds for investing elsewhere towards other financial goals. Another big advantage buying privately is the ability to meet the owner of the vehicle. You can determine whether they are the kind of person who might have maintained the car well and can feel confident buying from. You can ask them detailed questions about the car, such as how long they’ve owned it, where they bought it from and details on it’s mechanical history. A dealer will never be able to provide this level of history and detail about the car like the previous owner. Consider this also – you can learn a lot form the kerb appeal of where the car has been homed – has it been garaged or is it parked on a busy road? Ask to go inside their home to visit the toilet so you can get a sense of how they live. If it’s clean and tidy the chances are they have looked after the car the same way. How long has the current owner had the car? If they have owned it for a long time this is normally a good sign. Better still if it’s one owner from new. Are they a smoker and do they have pets that have travelled in the car? Pet odour and cigarettes smells are not pleasant and can be difficult to remove. Have a look at this RAC article that explains the 6 ways that knock value off your car. The same applies to what you should be looking out for when you buy one.

It’s worth noting that buying from a garage does give you more legal protection in the event of problems that may occur later, but you pay a high price for that. You can however negate a certain level of the risk from buying privately by having the car independently inspected by a motoring organisation such as the AA or RAC. If you are paying many thousands for a secondhand car it is certainly worth the relative small cost of having it professionally inspected for the peace of mind it will bring you. If you decide this make sure at the time you agree the deal that the buying price is dependent upon the result of a successful inspection. Be prepared that buying privately can be a time consuming exercise. You should consider whether you have the time available to effectively follow through the process. If you don’t, then it might not be worth the effort or risk.

The first point to remember – only buy a car that fits your budget. Stick to it and don’t get carried away by the romance of a dream car! Decent cars can be bought for little money and there is no shame in delaying your dream car until a later date when you have had time to save up for it! An important part of buying your car is making sure you buy the right car in the first place ie. It’s both desirable to you and practical in the long term. That way it should last you many years – and in the process, save you large sums in the long run because your overall depreciation costs are reduced over time. For simplicity, I’ve split the car buying process into five steps:

1. Decide your budget and choose your car
2. Search for your ideal car
3. Call the vendor and conduct online checks
4. View, inspect and go for a test drive
5. Agree a price and make the transaction

Your budget will ideally be based on what you have either saved up for or funds readily available. Alternatively if this is not possible, it should be based on what you have agreed to borrow from a reputable finance company on favourable terms. You will therefore know what funds you have available to begin choosing an appropriate car. When choosing your car, balance your priorities between second hand prices, functionality, needs, safety, reliability and overall running costs including depreciation and other costs. You need to weigh these against your budget. The following sources will help to identify a shortlist of suitable cars:

• Car magazines
• Cars you see on the road
• Motoring websites
• Local car dealers

Asking friends, family and work colleagues for recommendations may also prove helpful. To assist you further, here are some online guides that will help.

Safety

For the consideration of safety when buying your car, the Money Advice Service provides useful information on which of the latest cars are deemed the safest to drive, click here.

Depreciation

They also give information on how to reduce your depreciation costs here.

Reliability & Owner Satisfaction

Use the following links from both the Money Advice Service and Autoexpress to determine the best cars based on reliability and owner satisfaction.

Tax

Don’t forget to consider the costs of taxing and insuring a car before you make the final selection and begin your search. This government website can be used to calculate the amount of tax you need to pay. Online websites like Autotrader allow you to search using filters such as Annual Tax and Insurance Groups. These filters can be enormously helpful.

Use the filters on Autotrader shown above to get to know the market for your selected shortlist of cars.  Search each car on your list individually and compare the prices that are returned from your search based on model specifications. Widen the search criteria if you need more data. All this should arm you with enough information to whittle your preferred list down to just a few.

You’ve got your shortlist of cars. Now it’s time to search for those suitable to view. There are many different ways to do this. This article by Autoexpress, under ‘Finding Your Car’, examines some useful sources to find your privately owned car for sale. It provides a helpful list of what to look for in a classified car advert – I’ve made a template of it below to use as a reference tool and checklist when scanning car ads.

• Car make, model, engine size (and name), plus trim level.
• Registration number (on the number plate)
• Cost of taxing the car
• Date of last MOT and test number
• Last service date and service history
• Mileage
• Colour and type of paint finish
• Standard equipment/option highlights
• Where and when the car can be viewed
• Contact details/telephone numbers
• The asking price
• Clear, detailed photo

Mark any missing items from the list above for any adverts that interest you. Use it to guide you on what questions to ask when you call the vendor.

First, before you view anything, there are some important investigative jobs to do. It’s critical you do this – thorough checks before you buy will pay huge dividends later. It will also save you the time and cost of wasted journeys. Call the vendor shown in the advert and a good tip is to say “I’m calling about the car you’ve got for sale”. If they are a dealer posing as a private seller, they will need to ask you which car you are calling about. That should set alarm bells ringing as to why they are not an honest trader. It can be useful to find out how long the seller has been marketing the car. If they have been trying for a long time it raises questions about the desirability of the car, or perhaps the vendor is selling at too high a price. This is a good opportunity for me to advise you to be wary of any vehicle that has not been used for long periods, standing idle. It’s not good for an engine, causing parts to rust and deteriorate. Ask why they are selling, who used the car and when it was last driven. In addition to any questions you need answering from your advert checklist, you need to find out the following information that is unlikely to be advertised:

• The 11 digit reference number from the V5C registration certificate
• MOT test number

This information is required for the DVLA and MOT checks that will be necessary next. If the seller refuses to give you these extra details over the phone they might have something to hide.

Check the car’s details with the DVLA

After the phone call you must do some online checks to verify the vehicles DVLA records and MOT history. Use the DVLA’s free online vehicle information checker to make sure what the seller tells you matches the DVLA’s records. It’s important to make sure the car’s history and credentials stack up correctly. The DVLA checker will confirm the tax rate the vendor has told you using the 11 digit V5C reference number. If any details don’t match, contact the vendor again and ask them to kindly clarify them – it might be a simple mistake. But if you’re suspicious that the seller gave you fake details don’t proceed with the car, move on to the next one of interest.

Check the MOT history

For cars more than three years old they must have an annual MOT (Ministry of Transport) certificate to make sure they meet road safety and environmental standards.  Without this, they can’t be insured or driven legally on the road. The longer the period before the next MOT is due, the better. You can check its MOT history by logging into the free MOT Checker using the vehicle’s registration number. Looking at the MOT shows the reasons for any failures or advisory items identified, as well as the recorded mileage at each test. It will help you to verify the mileage provided by the vendor and any suspicious mileage differences between MOT’s. You should check that MOT tests have been done regularly throughout the car’s history. All this information helps you build a profile of the car. It pinpoints whether the car has been looked after and not ‘clocked’ so is well worth the effort. Gone are the days when the car’s odometer could be wound back with a judiciously applied drill. Today, criminals can access the car’s electronic brain and reset the mileage in seconds. Ask the vendor about any unusual gaps between MOT’s – don’t continue with the deal if you’re suspicious of the MOT history. A car might not have needed an MOT if it was unused for a period of time and was registered as SORN (statutory off road notification) – this could however be a different cause for concern as I’ve mentioned. Knowing the 11 digit reference number from the V5C document will enable you to view the MOT test locations. This can be helpful to build a picture of the car’s whereabouts. Make sure the certificates show the same chassis number and vehicle registration as the car itself. As a final piece of online research, you could also do a Google search of the vendor’s telephone number.  It may bring up some revealing and surprising results.

Take screen grabs of the advert

If the car passes the online checks it should give you confidence to view it. Before you do, it’s worth taking screen grabs and saving copies of the advert. The purpose of doing this is to provide corroborating evidence in the event anything goes wrong.  When I discovered there was outstanding finance on my car it proved invaluable later to have the adverts saved on my laptop –alongside other data such as text messages, phone calls and a receipt, the financing company could see that I was a legitimate person caught up in a crime as an innocent purchaser. The advert screen captures became important pieces of material to build my case.

Once you have completed all the online checks, you are now ready to view the car. It’s advisable to take with you at least one other person – ideally someone knowledgeable about cars. The more eyes to inspect the car the better.  Before you arrive you might want to agree between you who checks what, and how to plan the exercise efficiently. If possible try to arrange to view the car in the dry. A wet car with raindrops on the paintwork can conceal a variety of scratches and dents. Always inspect the car in good daylight when it is possible to see everything clearly.

Evaluate the vendor as well as the car

When you view the car this is also your chance to assess the vendor’s trustworthiness. Always view the vehicle being sold at the home of the vendor, as shown on the V5C/logbook – not from a car park, motorway service area, lay-by or any other location.  Any suggestion by the vendor to view the car at a different location should cause alarm. Check the details of whom you are buying from carefully.  Confirm who they are with proof of identity – a driving licence or passport is ideal. Genuine people don’t mind purchasers carefully checking. Don’t be tempted to attend anywhere else or speak to anyone other than the person listed on the V5C/logbook, however plausible the explanation might be. It is essential to be continually aware of the many kinds of cons that fraudsters will try. For example, it has been known for a vendor to even wait on the pavement outside an address, to make you think they live there.

Learn from my story

Be extra cautious and learn from my foolish errors. I knew it was sensible to view the car at the address shown on the V5 form but somehow got convinced to go to a location a few streets away because the vendor gave a very plausible explanation whilst en-route to his address. He said he had to quickly visit his girlfriend’s place to collect his daughter to take her to a dance class. It was more convenient to therefore view the car at his girlfriend’s. His demeanor suggested nothing suspicious. He was friendly, a young family man, it all appeared ok. The address the car was registered at was apparently his parents; it was only a couple of streets away so it didn’t seem a problem. On arriving, slight suspicion was aroused when we saw the car was parked in an area belonging to a block of flats, and the vendor was accompanied with a young male friend. The car was in general good order, well priced, nothing much appeared to cause concern except for being rushed along because he had to depart with his daughter. Shortly after the test drive and agreeing a discounted purchase price, he politely made his departure, leaving his young friend to take the cash. I only realised later how daft I’d been to neglect so many of the normal due diligence procedures, simply because I was desperate to buy a car. We had already driven over 30 miles for this viewing and I didn’t want to inconvenience my family further with other car viewings. The other factor affecting my judgement was the bargain price being offered. Good sense and logic had left me for that moment. None of this would really have mattered if it were not for the fact of taking one action. An essential point I had little knowledge of but a fundamental one when it comes to buying a second hand car privately- an online car history check. It only occurred to us during a half way meal stop en-route home. We were discussing the sale, and began questioning how the vendor, a young lad in his 20’s, had originally been able to buy a car that was only two years old. It was a light bulb moment – maybe he had taken a loan and maybe there was still finance against it. Suddenly the memory of hearing stories of cars with outstanding finance came flooding in to my conscience. I had little to no knowledge of what an online history check was, but that was all about to change. In the eyes of the law ignorance is no defence.  I was starting to feel very stupid indeed, and very concerned. My story is an example of how easy it can be to not follow your own rules when you feel under pressure to act quickly. Arriving home our suspicions were confirmed. Completion of the HPI check revealed finance was outstanding on the car. I sensed the worst and knew I was in for a stressful period ahead. It let to an extremely anxious few weeks. I had to provide as much evidence available to me to the financing company, alongside many follow up phone calls. It could have been worse, at least the vendor was receptive to my phone call to him. He gave assurances he would sort it out. After nearly two months of anxiety finally I got the confirmation I wanted. The financing company were satisfied I had proven my legal title over the car. They had removed their interest on the vehicle. Phew – I was lucky – it doesn’t always end up like that. I could have easily had the car taken from me by the finance company, and lost everything – not a pleasant thought. I can’t tell you the relief I felt when I received this confirmation from the financing company. A lesson most definitely learnt. This experience and my research that followed made me realise this kind of situation should never happen. Clearly there needs to be a change in the way second hand cars with finance are bought and sold. It is crazy for any buyer to be able to get caught up in this kind of fraud, whether conducted purposely or by ignorance by the vendor. A proposed solution, for example, could be for the V5C document to be held by the financing company until the debt is fully repaid.  This way the “owner” of the car would not be able to sell it. In the meantime, until such change is enacted, it is a case of “buyer beware”. Self-education is paramount. Follow the guidelines in this article and it will help you. What my story should highlight is that being conned, scammed, duped, or however you like to describe it can happen all too easily, even if you consider yourself astute to the kind of malpractices that fraudsters commit. It’s always good if you can learn from other’s mistakes and to do what is necessary to protect yourself from becoming the next potential victim.

Verify proof of ownership

Before you do anything else ask to view the car’s paperwork. The car should come with various documents holding vital information on its maintenance history and previous owners. If the seller can’t show you all of the documents below, walk away. Make sure you check the documents are all genuine. The V5C registration certificate (logbook) tells you the basics about the car’s history such as who it is currently registered to and how many owners it has had. It is important to be aware that the V5C registration certificate only shows the registered keeper of the vehicle. It does not necessarily mean as you might initially think that the vendor is the legal owner to sell it. If the vendor has finance against the vehicle, the legal owner is still the finance or leasing company- unfortunately there is normally nothing on the V5C document to make you aware of that. As I’ve already stated I think this is something the DVLA need to review. An online history check will confirm whether the vendor has proper title over the car and/or finance exists over it. More about this later.

Check the car’s VIN

A car’s identity has nothing to do with its registration number, which is something that could change several times during its life and is ridiculously easy to alter.  Criminals can for example easily fit a set of false number plates to a stolen car; it’s an easy way to snare the unwary. What you need to look for is the car’s VIN, or Vehicle Identification Number. This is a unique seventeen-digit number that individually identifies your car and distinguishes it from every other car in the world. As a result, it’s an important number to check whenever you’re buying a secondhand car. It can be found on the top of the dashboard and seen through the windscreen. It is also stamped into the car’s body, often on the sill and under the bonnet, and under the carpet on the driver’s side.  You’ll need to check they all match and are the same as the one recorded on the car’s V5 registration document. If they all match you shouldn’t have a problem, but to be completely safe, you’ll need to run an online car history check.

Check the Service History Booklet

Ask to see the car’s service history booklet to make sure the mileage recorded in it tallies with what you’re seeing on the dashboard. If the mileage varies, for any reason, you should be looking for some cast-iron reassurances before agreeing to buy it. You want to see lots of stamps in the book and the relevant invoices filed neatly away in a folder. Obsessive owners make great people to buy from!

Verify it’s not Cloned

A cloned car is when a car has adopted another car’s identity and is the automotive equivalent of identity fraud. At its most simple, it involves fitting the registration number from one car to another.  Although owners are legally obliged to present a car’s V5 registration document and proof of their identity before they can buy new number plates, there are ways criminals manage to circumvent this. Analysing the number plate can therefore be a useful pointer to spotting a cloned one. If the number plates don’t have the supplying dealer’s name at the bottom of them you need to find out why. Often there is a legitimate reason for a new number plate, but you need to be absolutely sure it’s a valid one. Take a look at the heads of the screws holding the number plate onto the car (assuming it hasn’t been stuck on). Are they scratched or chewed up? If so, why have they been removed? More sophisticated techniques involve the replacement or forging of V5s and cloning VIN (vehicle identification number) plates. It is estimated there might be in excess of 10,000 cloned cars on the United Kingdom’s roads. Very scary! How can you avoid it? To help protect against buying a cloned car, carry out an online car data history check. Make sure all of its details are correct, including colour, engine size and date of first registration. Also look for signs for any tampering with the number plates, V5 registration document, service history and VIN. If you’re at all doubtful, walk away, and if you think the seller is bogus it is best to contact the police to prevent a less vigilant buyer than you being scammed.

Check it’s not a Cut ‘n’ Shut

Cut ’n’ shut cars are created to hide the identity of damaged cars that shouldn’t be on the road. Look for signs of poor panel gaps and badly aligned panels, different shades of paint and cars being sold for much less than they should. Many cut ’n’ shut cars are insurance write-offs that should not be on the road. Take a look at this website from Honest John to educate yourself to some popular scams to avoid.

Look at the tyres

Tyres are also a great indicator as to how a car has been looked after. If all four match and have good tread left on them the chances are the owner hasn’t skimped on its general maintenance.

Other simple checks

Check the oil on the dipstick. Is it up to the ‘full’ level and clean? Ditto the coolant, windscreen washer, brake and power steering fluid. Careful owners will keep these topped up, while careless owners, from whom you don’t want to buy a car, won’t. The same holds true of the paintwork and interior. You want it to look cared for and loved. If it isn’t, how likely is it that the owner has looked after the hidden bits? Summary of key checks:

• Tyres
• Service history and MOT
• Bodywork dents or chips
• Cam belt history and next change required

It’s vital to take your time to look around when inspecting any car, and never feel pressured to buy the first one that looks suitable.

The test drive

Taking the car for a test drive is essential before making any offer. Detailed advice on taking a test drive has been published by the AA here. This AA page also covers inspecting documentation and viewing the car. There are two options if during the inspection and test drive you discover any problems. You can use them to negotiate a reduced purchase price, or you can simply walk away from the sale. Take your time to make the right decision. If you have any doubts at all move on to the next car.

If the inspection and test drive has gone as planned, if you are still happy to proceed it’s time to haggle and agree a price. Don’t be afraid to negotiate hard, this is where you can save a fortune. Keep it light-hearted and friendly – start low and let the seller work the price up. Stay calm and only pay up to what you have budgeted for. The benefit of having your finance in place reinforces your strong position to negotiate on the price. Remember you can always walk away if you feel uncomfortable or pressured to make the deal.

Get an online history check first

Once a price has been agreed and before any money is exchanged it’s imperative you conduct an online history check. My story earlier and the other advice included in this article should already have convinced you of the necessity of this. The online check will give you an almost certain guarantee that the car you are about to buy has never been stolen, written off, or has outstanding finance recorded against it. It will cost up to £20 but is well worth the investment. You will have peace of mind that the car is legitimate. You can get your online history check by using this link here. Refer to this government webpage for categorising any write-offs that might get flagged on your online history check.

Paying for the car

The price has been agreed and the car has passed the online history check. You now have the confidence to complete the final part – to conduct the transaction. If you plan to pay with cash here are some important considerations:

• If anything goes wrong later the transaction is not easily traceable like using electronic methods
• You might not feel comfortable or safe carrying cash, especially if it’s a high value car

Alternatively you could pay by electronic means. Here is a list of some important points to consider:

• A bank transfer is an easy method to send a large sum of money quickly; if you transfer it directly into their bank account, it often appears within the hour enabling you to take the car away the same day. Be aware though, your bank will have an upper limit on the amount you can transfer directly to someone else’s account so it’s best to check beforehand
• A bank CHAPS payment will incur a charge so check first
• A private seller may not be willing to share with you their bank account details

Never be tempted to transfer the money into an escrow account, where a third-party holds the money as a deposit to reserve the car for you. Most of these are scams. The majority of scams can be easily spotted and avoided using the techniques I’ve discussed. Use them and you’ll be clued up ahead of 95% of car buyers.

Transfer of registered keeper

Now the transaction is complete you must immediately record the transfer of the registered keeper by completing the relevant parts of the V5C document. Never buy a car without the log book. Make sure you get the original (not a photocopy) of:

• the log book (the V5C registration certificate)
• the valid MOT test document

The vendor completes and sends the V5C to the DVLA.This is done by completing the new keeper details (section 6) and signing section 8. They must give you the ‘new keeper supplement’ from the original V5C, but you’ll receive a new one in your name in two to four weeks. As the buyer, you keep the V5C2 ‘new keeper’ section of the V5 registration document. Use this DVLA webpage to guide you.

Get a receipt

The final part is to make sure you get a receipt for the transaction. It is better to take two that both you and the vendor sign and date. You can then keep one copy each. Why not prepare a template receipt before you leave home. Print two copies and take them with you on the viewing. The receipt should include:

• the make, model, engine size, registration and chassis number
• your address and the seller’s address
• the amount paid
• date and time of sale

This completes your private car buying process, but don’t forget there is one final thing – you need to tax it! The DVLA (Driver and Vehicle Licensing Agency) and police now use an electronic register to check people have paid their car tax.  When you buy a vehicle, the car tax will no longer be transferred with the vehicle, so you must tax it before you can use it.

Always book in advance rather than when you arrive at your destination. The sooner you book the more likely you’ll find discounts. If possible, try to book up to three months ahead.

Availability can be a problem at busy times, which is another reason to book as far ahead as you can, especially if you desire to rent a particular type of vehicle.

When doing the booking process, ensure you choose your dates carefully.  Make sure you are not renting for times that overlap into another day’s car hire charge.  Car hire rental fees are charged by the day, so if you go over by just half an hour, you will pay an extra days rental!

Always enter the correct start time for the rental, I suggest a couple of hours after your scheduled landing time, so that you have enoughtime to clear passport control, collect baggage and find your rental supplier.

Input your flight number if you know it, that way it helps the car rental company know when you are arriving if there is a delay. If you don’t add it to your booking and your flight is delayed by more than one hour at departure, you must let the rental office know otherwise your reservation may be cancelled, as cars are only held for two hours at busy times.

Whether you choose the budget approach to car rental and go via a car hire broker or happy to spend a bit more and go directly with a more reputable well-known international brand name, it’s always worth making the effort to choose your car hire firm carefully.

There are pros and cons of whichever option you choose.

The benefits of using the larger recognised rental companies are: they’re more likely to offer the latest car models, they operate a wider network of locations, prepare vehicles to a higher standard and offer emergency roadside assistance as standard; should have a UK based office or point of contact in the event of a complaint.

The downside is they’re normally a lot more expensive and you might encounter bigger queues at the pick up desk.

It is always best to book with one of the following: the UK website of a major car rental company, preferably a member of the BVRLA (British Vehicle Rental & Leasing Association), European Car Rental Conciliation Service (ECRCS), or with one of the better-known specialist brokers that should have a reasonably competent after-sales customer service team.

To start out, I recommend using the car hire broking sites to help cut the cost of car rental and make price comparisons easier. There are a lot of new players in this business, including airlines and European-based online travel agents.

Some examples include carrentals.com, easycar.com, economycarrentals.com, rentalcars.com, holidayautos.com, zestcarrental.com, but there are many others.

Be careful when doing your online search, because each quote may not be an exact like for like. Don’t necessarily go for the cheapest option, because rental companies are crafty, and will make hidden charges to get them ranked at the top of the price list, then clobber you later when you arrive. What each quote includes varies, so check closely before booking. For example, the cost of adding extra drivers, or hiring child seats can be high and varies hugely so shop around.

Be aware that brokers have different levels of control over what their suppliers sell you, and this may mean being offered extras when you thought you had paid for everything.

The majority of problems occur when a reservation has been made via a car hire broker choosing the lowest advertised price on their price comparison site. The broker is only a sales agent; the customer’s contract is always with the car rental company at the destination. When things go wrong many brokers wash their hands off the problem, and tell customers they must deal with the rental agent direct.

To mitigate against the risks of using a broker, use the review scores (out of 10) to guide you when comparing. I like it when a broker shows you the name of the rental car company you will be using: easycar.com do this, as shown below (Enterprise, in this example).

Next, a great tip – go direct to the rental company that you have chosen from the broker search and compare the prices, eg enterprise.co.uk. You may find that going direct is cheaper!

Also check directly with other big name companies that are not included in the broker’s list of companies used.

It’s always important to compare deals from both big and small players.

Some airlines have partnerships with car hire companies. EasyJet, for example, has a deal with Europcar. This can provide you a discount on the walk-up price, but as I recommend booking in advance, this is not much use.

Furthermore, if you book with a partner firm you are more likely to face queues at the airport thanks to the number of co-passengers chasing the same deal at the same time.

Watch out for
Amendment or cancellation fees – some car rental companies boast about free amendment or cancellation fees, but this can vary hugely. Check their terms and conditions to be certain what they mean about this.

If your plans change but you still need a hire car, one way to avoid a cancellation fee is to change your booking rather than cancel it entirely.

Reduce the likelihood of needing to amend or cancel the booking later by double and triple checking all the booking details are correct (especially car hire dates and times), before you click on the booking tab. In particular, make sure the car rental pick-up times are always written in local time, like flight departure times. So if you’re travelling abroad, don’t forget to take the time difference into account.

When choosing your vehicle, the smallest or cheapest car may not be the most appropriate. Consider the number of people and luggage to be carried. Comfort and safety are important considerations.

You may also be extremely appreciative for having chosen an air-conditioned car in a hot country.

I’m sure you’ve heard about it, if you haven’t experienced it directly; the service assistant explaining all the virtues of spending a small fortune on excess waiver or collision-loss-damage waiver insurance at the collection desk. You will come across unfathomable terminology such as excess waiver, CDW, SCDW, PAI or TP. To add further complexity, different companies may use different terms to describe the same product.

Get to know the most important terminology
Collision Damage Waiver (CDW or LDW in the US) is principally designed to cover damage caused in a collision with another vehicle and not single-vehicle damage. Over time, as budget car rental firms look for savings, the scope of CDW cover has shrunk and new exclusions hide in the small print. Basic CDW cover usually excludes damage to tyres, wheels, wing-mirrors, windows, hubcaps, the undercarriage and roof of car. It also excludes towing costs in the case of breakdown and clutch failure – even if you have only driven a few miles.

Super Collision Damage Waiver (SCDW) is a top-up insurance cover. It fills in the gaps that a standard CDW leaves. It will cover many of the exclusions of CDW and it reduces the excess (sometimes down to zero excess).

It certainly makes sense to have certain types of extra insurance cover since the excess levied after an accident, or if your car is damaged, can run into hundreds or even thousands of pounds. Taking out additional cover gives you added peace of mind from the financial risk if or when things go wrong.

These top-up policies are designed to refund excess CDW and theft protection (TP) charges levied by the car rental company.

This extra cover can add hundreds to the hire cost if you buy at the rental collection point. The good news is that you should be able to buy much cheaper standalone excess insurance from a separate insurer before you go.

If you are renting a car for a week or more normally it is cheaper to buy a separate annual excess recovery policy from an insurance broker: moneymaxim.co.uk offers a comparison chart of cover limits.

When it comes to taking out the extra cover, there are three options to choose.

ONE: ignore SCDW cover and buy (as already mentioned) a standalone insurance policy from a third party (Excess Reimbursement) insurer. This is my recommended option.

Advantage: Normally much cheaper. A stand-alone excess recovery policy costs around £40 a year for rentals in Europe which compares very favourably with top-up cover bought from the supplier’s rental counter, which can be as high as £15 a day.

Disadvantage: Need to resist the potential hard sale to buy extra insurance upon collection of the car; if there is damage, you will have to pay for it first and then claim the money back; to be reimbursed you must obtain an estimate of the cost of repair from the supplier – often difficult to extract – and lodge a claim with the insurer in the usual way.

TWO: Buy the extra insurance cover from the broker when you book. My advice – never choose this option.

Advantage: Other than it might be cheaper than being upsold when you arrive, and it’s more convenient when booking, there isn’t a clear advantage of this option. A standalone separate insurance invariably works out the cheapest.

Disadvantage: Normally a lot more expensive than buying standalone cover; likely to still face pressure to upgrade by the rental agency when you arrive at the destination; cover bought at the time of reserving the car is often provided by an insurer in the UK and not by the car rental agency in the destination – so the supplier will still need a deposit on a credit card (if you buy its own top-up waiver no deposit should be necessary); if you incur damage to the car you have to pay first and claim after.

THREE: buy extra cover from the agency renting you the car during collection. This is often referred to as a Super Collision Damage Waiver (SCDW) and can be very expensive if you want to be sure you will not have to pay for any damage.

Advantage: You have peace of mind knowing that you are covered for damages without having to pay first and go through the process of claiming back through your standalone or broker insurance company; you don’t get hassled from the service assistants because you’ve already upgraded with them.

Disadvantage: It will (most likely) cost quite a bit more.

Note of warning: You will be forced to take this option if you (a) don’t have a credit card, or enough credit on your credit card to pay their deposit “lock-in” fee to cover any potential damages, (b) they might claim your credit card has been declined and if you don’t have another one or two other backup credit cards at your disposal (this can be a broker scam at work).

It can be so easy to be taken advantage of when you are tired, it’s late, dark, and you just want to get your vehicle and drive to your destination as quickly as possible, so be prepared.

Further note of warning: The assistant may suggest a number of possible additional insurances to add, so only choose those you really need.

If you choose my recommended option, here is a list of companies that you can get standalone insurance quotes from.

   Leisure Guard Insurance (including a MMS special 10% discount when you quote Money10 using this link)

   icarhireinsurance.com

Note when buying standalone cover:

Exclusions can hide in the small print, so check the policy carefully – insurance4carhire.com, worldwideinsure.com and icarhireinsurance.com are among specialists with a good reputation.

When taking out extra insurance cover, check that it includes tyres and windscreen. These are the most common reasons for an insurance claims so are worth being covered for.

Make sure it is in the same name as the lead driver on the rental voucher otherwise it may not pay out.

If you’re only hiring for a short period, a daily excess insurance policy should be the cheapest option. For longer car hire, or if you rent more than once a year it should be cheaper with an annual policy.

What if you choose not to take out any extra insurance cover?

If you do this, you are taking on the risk of paying out in the event of an accident, theft or damage made to the vehicle.  As mentioned earlier, as a consumer you will be liable to pay a costly “excess”, that can be up to £1,500 and more.

You need to have enough capacity on your credit card to stand a hefty deposit, and maybe another back-up credit card.  Debit cards are not usually accepted because they have no pre-authorisation facility to ring-fence funds to cover damage.

Somewhat foolishly I’ve taken this high risk “no extra insurance” approach many times, but I only did it because I regularly rented at the same destination to visit my son and knew the process, where I was driving, and felt confident and happy to take the risk. Knowing what I know now, I won’t be doing it again!

If you do take the risk and damage occurs, the rental company deducts the estimated cost from the deposit held against you when you collected the vehicle (£1000 plus is quite normal). There is usually a standard charge per scratch or ding.

Make sure you manage your booking information efficiently, that way you can find it easily when you need it prior to your holiday.

I like to create a temporary email folder to place all email relating to my holiday bookings into. It means easy access to all my holiday documentation and it doesn’t get lost amongst the many other emails that fill my inbox.

This might seem obvious, but don’t forget to take your driving licence, passport and credit card when you leave home.  Also, have them easy to hand when you arrive at the rental desk.

Make sure you don’t forget other important documentation such as the car rental voucher, which could mean you are refused the car on collection. Check the hire company’s policies and procedures regarding what to bring.

Be organised and print off the necessary documents, or have digital evidence of them on your phone before you leave on holiday.

This is really important – make sure to take the credit card that is in the name of the lead driver on the rental voucher, otherwise you will have to pay again.

If travelling in a group, it can be a good idea to send one person ahead to collect the car while the others wait to collect baggage. This is one way to avoid queues at the car hire desk.

Pick-up desks often try to sell you an upgrade to a bigger car. In the United States, in particular, agents will try to persuade you to upgrade saying the trunk (boot) is too small for your luggage. Refuse attempts like this to accept an upgrade.

Generally the offer will be made because the size of car you booked is no longer available. This is the car hire company’s problem not yours – they have a legal obligation to give you what you paid for. If they don’t they are in breach of contract.

So if they give you a bigger car it has to be at the same price. If you get a smaller car than the one you paid for, you should get a refund for the difference.

No reputable rental company should ask you to pay for an upgrade if it can’t provide the vehicle model you have booked.

Make sure an upgrade charge isn’t sneaked on to the paperwork you sign, as it could double the cost of your rental.

If you plan to drop the car off at a different location to where you collected it, check the fees for doing this.

Most rentals have unlimited mileage but some do apply a limit, so double check.

Including a Sat Nav or GPS device with the rental might help with getting to your destination but it can cost £80 or more for a week’s hire. That’s terrible value for money. So plan ahead and think of other creative ways around this problem. For example, bring your own Sat Nav, or buy a new one (it could work out cheaper than renting).

Other alternative options might include:  buy a roadmap of the area; print-off online maps before you leave home; take Google map pictures on your phone; download Google maps offline on your phone; or use live Google maps/Sat Nav apps with roaming on your phone – be careful about roaming phone charges if you do this of course.

If you have young children who require car seats, take yours with you rather than hiring them along with your car (most airlines will carry them for free).

Not only will you save yourself a lot of cash – some companies charge up to £10 a day per seat. Your children will also probably be safer and more comfortable in their own seats.

Turn up just one hour late to the rental desk and your pre-booked, pre-paid hire car may no longer be available. Not only might you have lost the car and the money that you paid online, but you also now face finding an alternative car at inflated ‘walk-up’ prices.

This is why it’s important to enter your flight details at the time of booking – the rental company staff are then alerted automatically of delays and should not rent your car to another customer.

If you’re not collecting from an airport, make sure you allow plenty of time to arrive and inform the office of any delays.

When you are planning your holiday and car rental, it might be worth thinking about choosing an appropriate flight arrival time that works best for picking up a rental care – I realise that might not be possible depending on where you fly to. The point is, picking up a rental car in the dark is far from ideal, not only making inspection of the car difficult, but driving in an unfamiliar car in an unfamiliar place in the dark and on the opposite side of the road can be a challenging experience. It’s probably not the greatest way to begin your holiday.

If it’s too dark to inspect the car, go over it with a fine-tooth comb the following morning and report any further scratches, noises or mechanical concerns immediately. Note the name of the person you speak to.

Note that many car hire companies will charge extra for collection or delivery that’s out of normal working hours.

Allow plenty of time for the vehicle to be thoroughly inspected when you collect, and when you drop it off (especially during busy holiday periods). Be prepared for long queues.

Once the contract is issued read it carefully before leaving the office, especially items that have been ticked as “accepted” or “declined”. If there are unexpected charges ask about them. If the total shown is more than that printed on your voucher you may, unwittingly, have signed up for unnecessary optional insurances. Dispute them immediately otherwise you’ll have to pay for them.

Before you drive off, make sure that any damage, even a small dent or scratch, is noted on the pre-rental inspection form. As well as bodywork, you should check the windscreen, wheel hubs, the underside of bumpers and the edges of wing mirrors. Check for safety equipment and spare tyres. This too can take time but check that all the safety equipment required locally is present and that the spare tyre is not punctured or overly worn.

Open the boot and check that it has a warning triangle, high-visibility jacket, spare bulbs and any other items legally required in that country (the AA’s website will tell you what these are) otherwise you may be charged for their loss.

It is very important to check that tyres are in good condition, have sufficient tread depth and appear properly inflated. Some customers breach the standard terms and conditions and drive their rental vehicles off-road. This can result in a cut or bulge in the side wall.

It is also worth checking windscreen washers and wipers to ensure that they are not worn and the washers have water in them. Point out any damage that is not recorded and make sure you get an employee’s signature agreeing to the record.

I’ve read incidences of customers being charged for damaged door locks. This is a tricky one, because most cars have remote locking systems, and few people are likely to try the key in its lock before driving away. This can make it challenging to dispute when you return the vehicle.

Car hire companies will often make you pay well over the odds for repairs should you damage one of their vehicles.

I highly recommend you take digital photos of the vehicle on collection to protect you against any accusations of damage later and avoid unexpected charges.  Take photographs of all four sides of the car including all damage – this can be time consuming but will be worth it if there are problems later. This is another reason for not arriving in the dark!

Ensure you keep all photos until you are confident that the rental company will not charge you for any unwarranted damages or cleaning after the rental period. It’s always good to have proof to demonstrate you are not liable. Keep them at least until you have reconciled all rental charges on your next months bank or credit card statement.

When you get in the car, take time to become familiar with the switches and environment before you set off. The important ones include: wing mirror adjustment switches, hazard lights, heater/cooler, and radio.  Also check fluid and oil levels and carry out a static brake check.

I’ve made this mistake and been guilty of not doing this properly in the past: trying to fathom out how to change radio stations, adjust volume, or put on the air-conditioning in an unfamiliar car whilst driving is careless and dangerous.

It may sound daft, but starting a car you do not know can be tricky in this modern world of keyless vehicles, so don’t be afraid to ask the car hire assistant to explain how it starts and operates. If appropriate, request a copy of the handbook.

Check you have the necessary cover and a contact telephone number in case of accident or emergency. It is wise to also check that the glove compartment contains all relevant breakdown assistance information.

The other benefit of doing all this before you drive away is if you find any problems you can report them to the rental company straight away.

Driving in a foreign country can be very stressful – especially when you don’t know where you are going!  So check and plan your route carefully before setting off. Put it into the Sat Nav if you have one, and be sure to have an up-to-date map with you if you don’t.

If you have a long journey to your destination, or kids in the car, you will probably have to stop en-route at least once. Make sure you have enough snacks and supplies of water in case of a breakdown, especially when travelling in hot weather.

You may well encounter toll roads on your drive, so make sure you are prepared to pay the necessary amount.

Many toll barriers take cash or cards, but some only take coins so you don’t want to be caught out.

France and Italy in particular have many toll roads.

It’s important to know the local driving rules and laws for the country you are driving in, including what to do in the event of an accident.

Go online and do some research before you leave home. The AA is a good place to start for advice on local driving regulations.

In most of the countries you are likely to hire a car this summer, you’ll be driving on the right.

This can make things such as junctions and roundabouts tricky, at least until you adjust to the conditions, so take extra care and stay focused. Ask your passengers to give you some peace and quiet while you settle.

While many companies give you a ‘grace period’ for returning the car, it can be as little as 29 minutes. Thereafter, a daily rental charge applies, plus a processing fee in some cases.

As already mentioned, car hire companies calculate charges in 24 hour blocks, so if you rent a car at 1pm on one day, but intend to return it at 10am a few days later, still give a return time of 1pm. This gives you some leeway at no extra cost.

Always try to get the vehicle signed back in and retain a copy of the receipt to confirm there is nothing extra to pay.

Keep the receipt from the petrol station where you filled up the car on the final day.

If you drop your car off out-of-hours take photos of its condition, as you may be held responsible for any damage that occurs. Make sure you also include a picture of the fuel gauge if the agreement is to return it as you collected it.

Some car hire companies apply an ‘exceptional’ cleaning charge of up to €250. Always demand photographic evidence of the stain or damage in question.

Retain all documents and paperwork relating to your car hire that will be needed later when you do your monthly statement reconciliation process. This forms part of the “Organised Paperwork” section of the MMS Journey Planner. If you’re not familiar with the Journey Planner process, visit the masterMONEYsimply.com homepage and download your free copy and report.

During your monthly financial reconciliation process, check that all rental charges match with what you expect them to be; cross reference with your paperwork and if everything is as it should be, you can then shred or destroy your rental documents.

If you find any unexpected charges are taken from your card, ask for an explanation and supporting documents from the company. If you are not happy with the explanation tell the company the money has been taken ‘under protest’ and inform your card company about the dispute. If you paid by credit card you could make a claim against the card provider under section 75 of the Consumer Credit Act. If you paid by debit card you can ask your card company to use the chargeback system to reverse the payment and give you your money back.

The European Car Rental Conciliation Service (ECRCS) has a free service to help with unresolved complaints concerning cross border vehicle rentals within Europe. The ECRS can get refunds for incorrect charges, but will only deal with complaints about its member companies and you must have booked directly and not through a broker.

The European Consumer Centres Network has a free service to help resolve disputes.

Always pay with a credit card, as your rights under Section 75 of the Consumer Credit Act mean you can hold the credit card company jointly liable if anything goes wrong, as long as the value of what you spend is over £100 and not more than £30,000.

If you hired a faulty car as part of a holiday package you have the right to claim compensation from the package holiday company.

Around 500 car hire firms are members of the British Vehicle Rental and Leasing Association (BVRLA), which has a code of conduct and a complaints procedure.

If you cannot resolve a dispute with a car rental company in the UK use the British Vehicle Rental and Leasing Association’s conciliation service (bvrla.co.uk). For disputes over rentals in the EU contact the European Car Rental Conciliation Service (ecrcs.eu).