Buying a car

It’s one of the biggest purchases you’ll ever make (even if it is second-hand). And that makes buying a used car exciting - but a bit scary too.

When you’re spending this much, you want to get it right. That means paying a great-value price for a reliable car - one that won’t cost loads to run and isn’t hiding faults or a dodgy history.

To help you avoid costly mistakes, we’ve put together four essential tips for car buyers. Follow these, and you can look forward to cruising the South-West’s roads with a smile on your face.

Tip #1: Research the running costs

There’s a lot more to the cost of a car than its price tag. Car ownership means ongoing costs (think tax, petrol, etc.), so it makes a lot of sense to go for something that’s relatively cheap to run.

To find a make and model that will give you great value in the long run, you’ll need to look into:

• Tax
• Insurance
• Servicing
• Fuel economy - i.e. how far the car can go on a set amount of fuel, measured in Miles per Gallon (MPG). (The higher the MPG, the less you’ll spend on petrol.)

What Car? is a great place to start. Once you’ve found a review for a car you’re interested in, click on the green ‘Find used reviews’ button, and look for info on running costs under ‘Ownership costs’.

Also really useful is The Money Advice Service’s Car Costs Calculator. You can search for a specific car’s running costs by number plate or model details.

Finally, check out this list of the Cheapest Cars to Run.

Tip #2: Don’t buy too old, don’t buy too new

New cars lose value fast. In fact, once they’re a year old, they’ll typically be 15 to 35% cheaper than they were brand new. The average three-year-old car will be about 60% cheaper - but should still look good and not feel too different to drive, thus giving you much better value for money.

The drop in value (‘depreciation’) slows down as a car gets older. So if you buy an older car, its value shouldn’t drop so much in the time you own it.

The downside of older cars though is that you tend to get more problems. The older the car, the more it’s likely to cost you in repairs.

So a good rule of thumb is to buy a car that’s around three to five years old. As long as it’s been well looked after, and the mileage isn’t too high (around 8,000 miles per year is average), a car in this age range will likely give you the best value.

Tip #3: Be a detective

When you’re buying second-hand, you want a car that’s been ‘pre-loved’ - not one that comes with ‘baggage’ (hidden faults).

So get your detective hat on, and inspect each car thoroughly before you decide to buy.

It’s important to check:

• The mileage - does the wear and tear inside the car seem right for the number of miles? If the mileage seems low be wary - you don’t want to buy a car that’s been ‘clocked’.

• The condition - are there scratches, dents or signs of covered-up damage?

• The tyres- are they in good condition, with at least 1.6mm of tread? (Check with a 20p piece.)
• The paperwork - ask to see the V5C registration and MOT certificates. Then check vital details, like the car’s tax and MOT status, via the DVLA online.

This isn’t a complete list - so for more detailed information, we strongly recommend you visit the Money Advice Service website.

Once you’ve done your own investigating, take your detective work to the next level with a HPI check. HPI Ltd will do an in-depth search of the car’s history to make sure it hasn’t previously been stolen, written off or been part of a scam. It costs just under £20, but it could save you thousands - so don’t skip it.

Make sure you’re happy that the seller is honest, and that the car is in good shape overall. You can always use small issues like minor damage or above-average mileage to bargain for a lower price.

Tip #4: Get great-value finance

It would be nice to afford a decent car just using savings, but that’s not an option for many of us.

So what’s the best way to buy a car on credit? Let’s look at your main choices:

Hire Purchase

This is a loan offered by many car dealers. You usually pay a deposit (often 10%), and then repay the rest of the cost of the car, plus interest. 

It’s important to remember that, unlike with a Personal Loan, you won’t own the car until you’ve made the last payment. The debt is secured against the car, so you could lose it if you don’t keep up with repayments. 

Personal Contract Plan

Like Hire Purchase, you’ll typically pay a deposit, then monthly instalments plus interest. You don’t borrow the full cost of the car, but the amount it’s predicted to drop in value over the time you borrow (minus your deposit).

Your monthly payments can be relatively low. However, if you want to buy the car at the end of the deal you have to pay a lump sum called a ‘balloon payment’. If not you can just give the car back to the dealer, but you could still have to pay for damage and ‘over-mileage’ if you’ve gone over the agreed mileage limit.

Personal Loan

Unlike Hire Purchase and Personal Contract Plans, if you pay for your car using one of our Personal Loans, you’ll own it from day one. 

There’s no deposit to pay and no hidden charges - just affordable fixed interest. You’ll often pay less money overall than with other types of car finance too.

Even if you’ve struggled to borrow in the past, we may still be able to help.

 

Ready to finance your new set of wheels? Visit our Personal Loans page to apply.