The second hand car market in the UK is expanding. In the first quarter of 2017, sales of used cars reached an all time high. In fact, we’re buying so many used cars now that earlier this year the sales of new cars fell for the first time in eight years! There are a number of different reasons why used cars have become so incredibly popular. Perhaps the most significant is the Personal Contract Purchase (PCP). The PCP is the type of financing that many people use to buy a new car. It enables a buyer to make payments over a period of time and then at the end of say 3-4 years decide whether or not to make a large final payment to keep the car – or to hand it back and enter into another PCP for a different car. As more and more people choose to hand back these slightly used cars the vehicles make their way into the used car market, increasing both the volume and the options available.
Why opt for a used car?
‘Second hand car’ might once have conjured up an image of an old banger with the door handles held on by masking tape. However, today it could mean a vehicle that’s almost new – some aren’t even a year off the shop floor. Often, used cars have been very carefully looked after and are actually in better condition than a nearly new vehicle. So, there’s a lot more choice than there used to be. Plus, there’s the cost element. When you choose a PCP for a new car you’re effectively paying for the depreciation of the car, as opposed to the car itself. For many people that just doesn’t make sense and it’s better to buy a used car where, for the same price, actual ownership is involved.
Where might you find a good used car?
Given the increase in the size of the used car market there are now many more places to shop for a second handle vehicle than ever before. These include:
A local used car dealership
Online second hand car dealers
A private seller
The key difference between the options for buying a used car is the level of protection you get as a buyer. If you opt for a private seller, for example, you are very much subject to the principle of “buyer beware.” So, that means it’s up to you to find out everything you can about the car and its history. Dealers often have an “approved used” section, which means that the car has been checked over before it’s been put up for sale. It’s also easier to hold a dealer accountable if the car is not as described. It might cost more to buy from a dealer but, if you don’t have a lot of time or you’re looking for assurances about the state of the car, it can be a better choice.
How to find a really good used car
Search widely. Don’t restrict yourself to just one of the above but check auctions, dealerships and private sellers too. If you find a better price somewhere for a similar vehicle you might be able to use it as a bargaining chip to bring the price down with your preferred seller.
Always check the vehicle history. An HPI check will tell you a lot about the vehicle’s history, including whether it has any financing attached and whether it has ever been stolen or written off.
Don’t be put off by a higher mileage. Any car dealer will tell you that it’s the wear and tear on a car that you should be looking at, not the mileage. A very well maintained car with a higher mileage is a far better bet than a car with low mileage that has really been through the wars.
Add up ALL the costs before you decide. This means not just the cost of the car itself but everything else too, including fuel, financing, tax, car insurance, MOT, servicing, parking permits, charges and tolls. These could be vastly different from vehicle to vehicle.
If you’re going down the dealer route timing can be key. Many dealership salesmen and women will have quarterly targets to meet so you might get a better price if you’re in the dealership at the end of March, June, September or December.
Beware the emotional purchase. Buying a car you’ll look good in, choosing a model you think you deserve, or being tempted by the limited edition are all totally human behaviours but could mean you don’t get the best deal because you’re not acting rationally.
Avoid the tax trap. Car tax isn’t transferable between owners so if you’re being offered this to sweeten a deal then it’s not genuine. You’ll need to get the car taxed in your name as soon as you get the keys.
If there’s an issue, raise it. Even once you’ve taken the car home if you have a serious problem with it then go back to whoever sold it to you. This is easier to do with a dealership or at an auction – if you bought from a commercial business then you can make a complaint to Trading Standards.
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read more about Alex Hartley