So, you’ve looked at the various finance types available for buying a car. You’ve weight up the pros and cons, crunched the numbers and probably realised that buying a new vehicle is going to lose about 25% of the total value in the first 30 days.
Savvy car buyers might want to think of buying a late, low mileage car for around 30-40% less than new car money.
Executive ranges like Mercedesand BMWoffer some salivating savings. But if you’re looking for a mid-range family car like a Volkswagen or Audi, there are some juicing finds.
In the UK, there is a stack of main or franchised dealers just waiting to invite you into their leer. Check out the graph below depicting a plethora of multi-dealers from 2014 to 2017.
The running costs of a franchised dealer are vast which explains why more and more manufacturers are sharing plots. In the city of Bristol, you can find a Mazda, Fiat and Hyundai dealership in the same showroom! Each with its own corner display and a row of eager salespersons.
What this means for motorists is a buyers’ market. With the Brexit saga into its extensions and the UK pound at an all-time low, car dealers want to sell.
Buying a late low mileage car is the way to go for a bargain
Let’s say you are prepared to spend £15,000 on a Volkswagen Passat 2.0 TDI Estate with up to 10,000 miles on the clock.
These days, you can see asking prices a little over your set budget of 15K. If you handle yourself well and have a knack for striking up report it’s completely possible to get the car you want for your set budget.
This is especially true when taking up a finance option with the dealers.
Personal Contract Purchase (PCP), Hire Purchase (HP) and Contract Hire are offered by most major manufacturers with astoundingly low-interest rates and small deposits.
If you were happy to put down a 5K deposit and borrow 10k over 48 months, your payments could be a little over £200 per month.
Dealers can also offer you balloon payments on certain finance types that basically allow you to pay back half of the loan and return the car at the end of the term. In this type of arrangement, you could drive a nearly new car away from about £100 per month!
When buying used it is crucial to buy yourself a car history check. In the US they’re known as a CarFax. The UK market is a more competitive space with some main providers including hpi check, RegCarCheck, RAC passport and CarVeto history checker
The latter offers all the data you need for about 50% less than the main providers. You’ll get all the details on the car like outstanding finance, theft alerts, mileage anomalies and accident damage repairs.
CarVeto also includes a nifty car buyer guide as part of each check. It’s a tonne of useful information for motorists who might feel tentative about buying a used car.
Our recommended dealer buys include Volkswagen Passat or Golf, Nissan Qashqai, Range Rover Envogue, Toyota Yaris and Audi A5.
These types of vehicle are renowned for retaining their value.
The modern car buying process considers resell value
To understand the true cost of buying a car it is best practice to consider how much the car might be worth when you come to sell it.
UK motorists are most likely to own a car for 3 years and travel an average of 10,000 each year.
Using these metrics, you can quickly determine how much you can sell for when the time it right.
How to predict future car value
Autotrader enjoy over 10 million unique website visits every single month and this number is growing.
Autotrader is the go to place for buying and selling a used car in the UK.
Let’s imagine it’s 2019 and you have bought a 1 yearold (2018) Volkswagen Passat 2.0 TDI Estate with 10,000 miles on the clock.
Head over to Autotrader and have a look at comparative VW Passat Estates. Adding on your 30,000 miles travelled over 3 years, refine your search via these parameters.
The search will be something like this:
Manufacturer: Volkswagen
Model: Passat 2.0 TDI Estate
Mileage: 40,000
Age: 2015
You are searching for comparative cars that are 4 years old (the period of time you will have owned the car plus its current age).
In this example I am looking for a 2015 with 40,000 miles.
Now look at the top five Autotrader page results. Your new car will be worth in and around this price range in 3 years time. You will need to allow for general condition, service history or any potential mechanical issues.
Understanding future price can be helpful for deciding which finance package you choose at purchase.
For example, if you take out a 3 year Personal Contract Purchase (PCP) with a final balloon payment (you will know the balloon payment prior to taking up the agreement) you can begin to understand the value or the car versus the final payment.
At this stage, you have a choice to settle the balloon payment and own the car outright or give the car back to the dealers. That’s what PCP is.
If your new car is going to be worth less than the balloon payment owned it is financial sense to give the car back to the dealers and buy something new.
If the car is going to be worth more than that last payment you might be able to make some money.
