12 May 2022 Concept Car
Buying a car with a bad credit rating has never been easy. But it’s particularly hard in 2022.
In this in-depth and comprehensive feature, we’ll explain the reasons for the crisis and how you can still find great car deals.
One thing’s for sure: The car market in 2022 is not the same it was before the pandemic struck.
Will it ever be the same? Let’s find out.
So, what, exactly, has changed?
As you may have gathered from the news, automobile sales are picking up again. During the peak of the pandemic, many potential buyers delayed getting a new car until after the crisis.
Unfortunately, the way it now looks, that may not have been a wise decision. As we’re nearing the end of the lockdown era, many of us may no longer be able to afford a car of our own.
Thankfully, you don’t have to do that. Instead, we all have to learn to live with the new reality. What you will need to do is thinking about alternative ways of finally getting that new car you thought about for so long.
It’s a consoling thought that you’re not alone with your worries.
According to Motor 1, one in every three drivers is planning to get a new car this year.Even if that number will unlikely manifest in practise, it is a massive signal that drivers are tired of waiting.
All in all, there are nine major trends when it comes to car deals in 2022. Let’s take a look at them in turn.
If you’re reading this article, you’re likely thinking about getting rid of your old car. As we just mentioned, many in the UK are doing the exact same thing. In fact, quite a lot have already done so!
Over the past year, sales of both used and new cars skyrocketed. In fact, sales numbers were so high that prices soared as well. According to the latest figures, purely in terms of the turnover, we’re now pretty much back to pre-Covid levels.
Is this a temporary blip or a long-term trend? Although we need to be careful with a prognosis, especially with the current unstable political climate, we believe the latter is the case.
For the past decade, the UK car market was too good to be true: A huge choice of used and new cars as well as a wide range of innovative financing options meant you could essentially always find something you wanted.
Now, however, things have reversed. More and more people are lining up to buy less and less cars. And there is every reason to believe that this trend will continue. Although sales numbers may take a while to recover, the surge in prices of both new and used cars will make up for that.
Which is good news for dealers and lenders.
No one knows for sure when the chip crisis will end. But according to many experts, things will stay difficult for some time to come.
Effectively, this means that those with enough cash will have to pay more than ever. And those with bad credit scores may not be able to afford a car at all. Read our special report on Covid car finance to find out how all of this is affecting you.
(But don’t worry, we’ll offer practical solutions later on in this article. If you don’t want to wait that long, simply drop us a line via our contact form to see what we can do for you!)
Used cars were traditionally a beacon of security for financially challenged drivers. Even if you could not afford a new vehicle, the second hand market offered plenty of choice and fantastic deals.
These times aren’t entirely over. But one thing’s for sure: Used cars will become more expensive. And, as with new cars, this is a more or less permanent development:
As new car sales continue to fall behind demand, the second hand market is starved of sellable product. Calling this a drought would be overstating things. There are still millions of cars out there waiting for a new owner. It will just be a lot more expensive to buy them.
How much more expensive are we talking about? Certainly, reports of used car prices rising above those for new vehicles are slightly exaggerated – although it does happen on occasion.
Still, the difference in price compared to just two years ago can be quite baffling.
On average, a used car is now 25% more valuable than it used to be. A £5,000 car would now cost you £6,260 – wow!
We’ve written about just as new cars on various occasions on our blog. With good reason: For anyone with just a little more cash to spare, they used to be a fantastic option for getting incredible quality at a very reasonable price.
What defines an as good as new car? Typically, these vehicles are around 3-4 years old. Which means they are past the point of highest depreciation and have become a lot cheaper.
Traditionally, these models used to be fleet cars, leasing models or rentals. Which means they’re usually in great shape. (Actually, rentals are a bit of a hit and miss, but there are currently far fewer ex-rentals in circulation anyway.)
Unfortunately, supply for these is low as well. And with the long waiting times for factory new vehicles, as good as new cars are just about the most coveted option out there.
This is almost certain to pick up again, as companies become more optimistic about the future. But right, now, don’t waste any time thinking about them.
Inflation was so low for a while that the EU’s central bank pumped billions upon billions into the economy to get it to rise again.
This now seems very ironic indeed.
The Finance and Leasing Association (FLA) has issued a warning that inflation could well reach 8% in early 2022 – well beyond its comfort level. According to the association, the Ukrainian political crisis could be to blame. We’re not rejecting this assumption – although it isn’t quite clear why the war would affect the Pound in this way.
Either way, the warning is for real. A rise in inflation essentially means that the same amount of money buys you less. In essence, this is a double blow: You’ll need to spend more for your daily requirements and then you’ll have less to spend on a car that has also become more expensive.
It’s probably too early to make any meaningful predictions about the future development of the Pound. But things aren’t looking too bright.
2030 will be one of the most remarkable dates in the history of the automobile. At least in the UK. From January 1st of that year onward, you will no longer be able to buy any new petrol or diesel cars! Which means we’ve reached a milestone and historic turning point: The age of the electric car will have begun.
This is great news for the environment. We also believe it’s great news for you.
Electric cars are much cheaper to run, they are more reliable, last longer and are less expensive to repair. Which means you’ll be saving money over your current petrol expenses.
Until that moment arrives and for a few years after that, however, things are slightly less clear. At least right now, electric vehicles are still out of reach for many drivers in the UK. And the second hand market is only developing slowly.
Ultimately, the best you can do is observe the developments and keep an eye for great deals. The closer 2030 comes, the more urgent this topic will become.
As a consequence of this uncertainty, many car buyers prefer to take out short-term loans instead of paying off their credit over a long period of time.
The rationale behind this is that a short-term loan allows you to keep driving a petrol car for the moment, but respond to new developments a lot faster and more flexibly.
Let’s say you buy a car now and finance it with a five year loan. In 2027, you’ll then have paid it off and can evaluate the new situation. Perhaps there are far better EV deals by then. Or if there aren’t, you can simply keep driving your car, which is now paid off in full, and save money on your instalments.
Either way, these short-term loans offer more security in an otherwise pretty difficult situation.
We’re not sure if we can call this a current trend per se. After all, paying for a car in full has essentially become the norm in the UK a while ago.
Already in 2019, less than 10% of buyers forked over the full purchasing price right away. By now, that number will only have grown.
Which brings us to our final trend for the car market in 2022:
PCPs were already the dominant finance modality before the pandemic. Covid has only served to increase their appeal.
PCPs offer low monthly payments, access to high quality vehicles, as well as the opportunity to either
These undeniable benefits have only become more attractive in 2022.
Compared to PCPs, leasing is even more more affordable on a monthly basis. And it also means you get to drive a brand new car every three years. Which sounds like a dream come true if you’ve spent most of your commute in an old, worn-out beater.
PCPs and leasing are both not perfect. They are certainly, all things considered, more expensive than a regular bank loan and far more expensive on average than a used car. But it’s easy to see why they’ll remain at the top of the list for many.
We don’t really have a historic precedent for the current situation. But we can certainly draw a few conclusions:
So what does this mean for you, concretely? Here are our nine recommendations for finding great car deals this year:
Checking car deal sites regularly is not something special. We all do it, and we all spot a great deal from time to time.
Here’s the thing, though: This is no longer enough. If you want to stand a serious chance of getting a good car at a good price, you’ll need to stay alert all around the clock.
Make it a habit to visit car deal sites every day at different times. At Concept Car Credit, for example, you can find up to date offers both on our website and our Concept Car Credit Facebook page all the time.
Also, make sure you know exactly what you want and what you are prepared to pay for it. So that when you spot a fantastic offer, you can take a decision fast.
One of the most unfair things of the way that finance works is that those who already have more money have better access to fresh capital and can borrow at better rates than those with financial problems.
This trend is set to solidify even more within the current crisis. If several potential car buyers apply for a loan, chances are that those with the best financial profile will get the deal.
That said, you don’t have to admit defeat straight away.
There are a few things you can do to improve your chances for car credit. But the one thing we keep coming back to is being able to make a downpayment.
A downpayment significantly contributes to a feeling of trust. Plus, it makes the loan cheaper for you and less risky for the lender.
Set aside a little cash at the end of each month to make it work.
And if you really have nothing to spare, talk to us now on our free phone … We will usually be able to secure you a loan even if you can not pay anything upfront.
Sure, a Polo is a fantastic car. And who wouldn’t love a Toyota Corolla or a Ford Fiesta? Or how about a Mini?
We get it. These cars are among the UK’s most popular choices. So it’s not hard to see why so many want them.
But that also means that they’ve become even more expensive.
Right now, the best you can do is to think from a practical perspective. Meaning: Think of what you need out of a car first. Only THEN look at which cars meet these requirements.
The great thing about the car market in 2022 is that there are very few real duds out there. Almost all major brands have improved their quality control to a degree that you can hardly go wrong anymore.
Which means that, although your heart may not be in it entirely, you are almost certain to find a fantastic car which has everything you need – and potentially more.
Now is certainly not a good time to buy a car. They’re expensive, choice is worse than it has been in a long time, finance is difficult.
However, when it comes to selling a car, things haven’t been this good in ages.
If you still own a car, then you have a major ace up your sleeve in your quest to secure a loan. After all, what else is a trade-in but selling a vehicle?
They’ll be excited to hear you can offer them one. Which means that not only should you be able to get credit much easier, even with a bad credit rating, but you should also get better conditions.
Never ever separate the two and try to sell your car at a “better” price on the private market. That strategy might have worked in the past. But right now, you want to combine buying and selling your car to optimise your deal.
PCP and leasing have their benefits for sure. The problem is that they have plenty of disadvantages, too.
Importantly, these two types of car finance are the exact opposite of “value for money”.
Sure, you can get PCP even if your rating is less than stellar. But it’s going to cost you. Ultimately, you’re driving a new car and new cars are expensive. Dealers will get their money’s worth in the end. The question is, will you?
One of the main downsides of these two forms of borrowing is that the cars will usually never be yours. Leasing is particularly tricky in this regard, since you don’t even get to choose if you want to keep your contractual vehicle at the end of the term.
Ultimately, you’re locked into a lifelong cycle of borrowing and borrowing and borrowing. Which may be okay in some cases. But, generally speaking, it also means you’re in trouble when your monthly expenses exceed your income.
There’s a simple reason so many of us are focussing on monthly instalments rather than the interest paid on a loan: If you only have a certain amount to spend each month, you can’t be picky.
We don’t think this strategy is a bad thing. In fact, we encourage it. Especially for anyone who has run into financial trouble in the past and is now struggling to make ends meet.
Your number one priority with any loan is to pay it back. Only if you’re absolutely certain you can manage that should you think about getting a “great deal”. What use is a plan for paying back your loan quickly if you end up defaulting on it half-way?
It may not seem logical to think this way – especially if you’re low on reserves, it’s part of our instinct to want to go looking for deals first. But in this particular case, it’s decidedly better to prioritise safety over cost.
The car market is highly cyclical. Which means that prices fluctuate considerably over the course of the year. In theory, cars are cheapest in the Winter months and, specifically, towards the end of the year. They’re at their peak in the early Summer.
The explanation is that people prefer to buy a car when they’re in a good mood. And warmer temperatures and a prospective vacation puts them in such a mood.
Conversely, Winter time is the time to snuggle up at home. The end of the year is also bonus time for many dealers. Which means that they’re keen to move as much stock as possible. Which opens up the door to deals and discounts.
With the Summer approaching fast, it makes sense to intensify your search. Ideally, you should buy before June or even a bit earlier, to avoid the impending price hike.
If you’re serious about getting a great car deal, you may want to cut costs in 2022. As we mentioned above, inflation is rising across the board. Cars are getting more expensive and so are many other items. Which means you’ll have less to spend on a great deal when it comes around.
Psychologically, this is hardly the most attractive time to do this. After all, you just spent two years at home, without going out, enjoying a restaurant meal or a night at the pub.
However, it makes sense to remain strict a little longer. Ultimately, the only sensible reason for being frugal is to be able to afford something incredible: Your own car!
We want your loan application to succeed. That’s why we always try and make things work. Even if you can’t afford a downpayment, or need a little longer to pay back the loan. Even if you’ve had serious financial issues in the past.
However, it always makes sense to ask for support.
Far too few of those with financial problems check back with friends and family for a little financial help. Sometimes, even a tiny contribution can make the difference between being able to make a down payment or not. And sometimes, a few more reserves on the bank can convince a lender that you won’t default on them at the very first crisis.
Friends and family can not replace banks or dealer finance. But they can play an important part in making a deal happen.
Make it count in 2022!
Even with our long experience, 2020 and 2021 were unlike any other year we’ve previously encountered. For many of our customers, these two years made an already difficult situation even more challenging. For others, they meant having to delay a car purchase even though they desperarely needed one.
In this regard, even the current crisis, with its ongoing uncertainty and exploding prices, is better than what came before. If all goes well, you should be able to keep visiting showrooms for the foreseeable future and buying a car should return to being something entirely normal.
That said, the challenges remain.
If you’re looking for credit but your finances are weak, you’ve come to the right place. At Concept Car Credit, we specialise in bad credit car finance and help many thousands of drivers find a great car and secure a loan.
If you’d like to be one of them, get in touch now. We’d love to hear from you!
Call us at our FREEPHONE: 0800 093 3385.
12 May 2022 Concept Car