MONEY TALK by Susie Haywood RAC

Thousands of would-be car buyers will soon be crowding into Birmingham's National Exhibition Centre for the Motor Show. But is a new car really worth it, or would motorists be better off buying a motor with a few miles on the clock?

It seems Britons can't resist that new car smell.

Roughly two and a half million new cars are sold in the UK each year.

But our research shows that many vehicles lose thousands of pounds as soon as they are driven away by their new owners.

A car loses most value - the industry term is depreciation - in the first few years of its life.

In fact, some cars can lose up to two-thirds of their value after just three years.

Many dealers will quote 'list price' - this is the car industry equivalent of the recommended retail price - but very few when pushed will stick to this price

What is more, our research suggests that cars are depreciating more quickly, not more slowly, than in the past.

Rises in petrol prices and increases in depreciation pushed the cost of running an average car up by almost 3% to �102.59 a week in the last quarter of 2003.

After paying a mortgage or rent, owning a car is the most expensive thing you will shell out for, costing you on average a whopping 25% of your take home pay.

So any money that can be saved at the outset will ease the financial pain, when it is time to sell.

Price push

Don't just accept the first price on offer from your local dealer.

Many dealers will quote 'list price' - this is the car industry equivalent of the recommended retail price - but very few when pushed will stick to this price.

Different franchise dealers will offer different deals.

If your heart is set on a particular make and model of car there is nothing to stop you playing one dealer off against the other until you get a price your happy with.

What is more, the UK car market is more competitive than ever.

Franchised dealers no longer have the market sewn up, there are car supermarkets and online sellers offering many different brands of car and vying for business.

Cheeky

Wherever you choose to buy your car once you have negotiated a price, the bargaining shouldn't stop.

Alternatively, you could just hold off buying a new car and pick up a nearly new vehicle which may already have suffered heavy price depreciation

Be cheeky ask for some extras such as car mats, mudguards even a full tank of petrol. It all adds up.

Many people have to fund a new car purchase through a loan.

It may not be as tactile or tangible as a new car, but the choice of finance can be absolutely crucial and should not be an after-thought.

Buy a new car using a loan charging a high annual percentage rate (APR) can add hundreds of pounds to the eventual cost of the vehicle.

In fact, it is often a good idea to sort out the finance before you go shopping.

Used deals

Alternatively, you could just hold off buying a new car and pick up a nearly new vehicle which may already have suffered heavy price depreciation.

Lots of franchise dealers offer nearly new cars with extensive warranty packages tacked on.

The idea is to offer peace of mind and an experience as close to buying a new car as possible.

Whatever the age of the car, don't forget to get it inspected before you hand over any cash.

Our research has shown that half of the vehicles examined during one month had at least one potentially dangerous fault, while eight out of ten had problems that would cost at least �200 to fix.

And be aware that most warranties will not extend or claims for wear and tear.

If the trouble isn't mechanical or electrical it probably won't be covered.