The cost of vehicles is ever growing, reason why buying a used car in the UK can save you a great deal of money. According to AA, new cars lose 40% of their overall value after the first year. Scroll down to read our step-by-step guide to buying a used car!
USED OR NEW CAR?
A decision which confuses people is whether to purchase a new or used car. So, we’re going to break it down.
PROS OF NEW CAR
The benefit of buying a new car, apart from the fact it’s new, it will normally come with a warranty. Repairs are usually at the bare minimum for most drivers, so technically you only need to focus on the maintenance side of things. Either way, you pay zero towards car replacements or repairs.
Plus, you can customise your new car to however you like. Or, you can have the dealer look for a car that closely matches your personal preferences. There’s also a higher chance of safety in your new car.
CONS OF NEW CAR
The obvious denominator of buying a new car is the price. The average cost for a car in the UK, according to Motor Trader, is £28,973.
You also face higher tax and insurance costs. Let’s not forget the fact the value of your car drops tremendously after the first year.
PROS OF USED CAR
The top benefit of buying a used car is the price. You can save up to thousands of pounds, plus your cars value won’t depreciate as soon as you’re behind the wheel.
Finance rates for used cars is also a bonus. Depending on the age of the vehicle, you can save a good bit of money. With the popularity of used cars growing, you will have a wider range to select from.
CONS OF USED CAR
The pitfall of going down the used route is not so much the car itself, but the dealer. They may have tweaked the car to make it more appealing and “new looking”, then a few months later you’ve broken down on the drive to work.
Plus, your dealer won’t include a warranty in the package, meaning you must pay for any replacements and repairs.
DIESEL OR PETROL CAR
Nowadays, there’s not much difference between diesel and petrol financially. Each have their benefits, but both have their downsides.
PROS OF DIESEL
Given that diesel uses up to 20% less fuel than petrol, this results in lower running costs. With lower CO2 emissions, they will receive lower tax bands.
If you use the motorway constantly, love long drives and visiting the country side, then it would be worthwhile going for diesel considering they have more horsepower. Petrol’s need to be revved higher to boost performance.
CONS OF DIESEL
Fuel for diesel is more expensive than petrol. Although most receive a lower tax band, newer cars might receive a higher tax cost.
PROS OF PETROL
The cost for petrol fuel is lower than diesel, plus they can be cheaper to buy.
Although they are not as environmentally friendly as diesel, they do produce less nitrogen. Plus, if you’re looking for a smooth ride with less noise, then petrol is your solution.
CONS OF PETROL
The obvious drawback of choosing petrol is the amount of CO2 they produce. Also, they use much more fuel than diesel, meaning higher running costs.
BEST WAY TO BUY A USED CAR
The biggest decision people make when car hunting is how they’re going to pay for it. Your options include:
The best and cheapest way when buying a used car is with cash. When going down the hire purchase or PCP route, you need to pay interest. This means the overall cost of the car will be higher once you’ve paid it off.
Although saving up for a car takes time, it’s a lot healthier for your finances.
When using cash, ensure you have some left over in case of emergencies. If you don’t want to buy the car outright, use your savings to put down a large deposit. This will lower the amount you pay monthly.
Plus, the biggest benefit of using cash is: you own the car.
If you don’t have the available funds to purchase your dream car, it would be worthwhile to apply for a loan. This will allow you to spread the cost of the vehicle over an affordably term. There are 2 types of borrowing you can choose from: secured and unsecured.
A secured loan is probably the more cheaper option. Although the loan uses your home as security, this poses less risk to the lender. This means you can access reduced rates of interest, which will lower your monthly repayments. If your credit rating is a little under perfect, then don’t worry! You can still apply for a secured loan and likely receive approval.
The alternative to secured borrowing is an unsecured loan. The advantage of this option is not having to offer up an asset as security, meaning you don’t risk losing your home. You will however, face higher interest rates.
The benefit of both borrowing methods is, you can choose the length of the repayment period. This can vary from 3 up to 30 years.
HIRE PURCHASE (HP)
You have the option to purchase a car through Hire Purchase. Like to a secured loan, where the loan is secured against your home, the loan is secured to your car. Unlike a secured loan, where you own the home, you won’t own the car until the loan is repaid.
A contract will be written up by the dealer. You will make fixed monthly repayments of a specific number of years, for which you will need at least a 10% deposit. The repayment period can range from 12 up to 60 months, meaning you have a respectable amount of time to repay the loan.
Although fixed rates are competitive, there tend to be higher than secured and unsecured loans.
PERSONAL CONTACT PURCHASE (PCP)
Similar to hire purchase, you make an agreement with the car dealer to spread the cost of the car and repay the loan monthly. The difference with PCP is your monthly repayments will be lower, but the total amount you pay back will be higher than the original cost.
The loan you receive is based on the value of the car to begin with and the estimated value at the end of the term. Your annual mileage will be factored in with this.
You will need a minimum deposit of 10%, with a repayment period ranging from 12 to 48 months. When the term ends, you can choose to either trade in the car and start a new contract. Or, you can give up the car for which you will pay zero for. If you want to keep the car, you will need to pay what as known as a balloon payment. This can cost thousands of pounds depending on the resale value.
This is another common option for buying a used car. You will agree to make fixed monthly payments to the dealer, maintenance and repairs will be included. However, the downfall of leasing is the fact you will never own the car.
Once all the repayments are made, you must give the car back to the dealer. You are also set an annual mileage limit. If you go over it, you face paying extra costs. You may also be charged fees if you want to end the contract before its initial date.
BEST TIME TO BUY A USED CAR
According to Auto Trader, the best times to buy a used car is during September and March. This is the time when drivers exchange their old cars for new ones, so you might want to shop around when this happens.
Other good times to look for a used car is at the end of a period for example the end of the week, month or year. Nobody really shops for a car during the Christmas period due to buying presents for family and friends, so this might be the best time to browse for a car. Boxing day, bank holidays and even Black Friday are good times to shop around for a car.
BUYING A USED CAR CHECKLIST
It’s important to inspect a used car before buying it, especially if you’re buying privately. We have put together a quick checklist which you should follow:
- Get the documents: before purchasing a new car from a private seller, ask for their V5C document. If you’re unfamiliar, it’s a document which states the owner of the car is, the date in which the car was registered, the manufacturer and so on. The document should also include the ‘DVL’ watermark. If it doesn’t, the seller could possibly be a scammer. If the seller can’t provide you with a V5C, do not buy the car!
- Check the VIN: this is known as the ‘Vehicle Identification Number’, which can be found on the base of the windscreen, beneath the carpet at the driver’s seat and under the bonnet. The number should match to the VIN on the V5C.
- Do youR research: if you want to avoid being charged more for what the car is worth, search other websites or visit showrooms do find out the market value of the car you’re considering buying.
- MOT: when buying from a private seller, ask for their MOT certificate. If they seem unfamiliar with the cars history, it would be smart to look elsewhere.
- Mileage: it’s known for scammers to boost the cars value by decreasing the cars mileage. This as known as ‘clocking’. If the mileage looks lower than the appearance and age of the car, the miles could have been clocked.
- Tyre check: always check the condition of the cars tyres, taking the tread depth into consideration.
- Windows and locks: if one lock or window works differently from the other, this could show signs forced entry.
- Check underneath: take a good look under the bonnet and the car if you can. Scan for rust and any signs of damage.
- Test drive: does the car run normally? Always drive at different speeds to ensure the steering wheel, pedals and gear stick works. Also check the electrics.