Don’t you love that new car smell? Alas, it’s not for everyone. In the UK, only one in three cars sold is new. And with the effects of the global recession still trickling down, the market for pre owned cars is bound to keep growing for a few more years.
If you’re a true car aficionado, this may seem disheartening. To many fans, driving a factory new car off the lot is a dream come true. But, really, the growth of the pre owned car market is great news.
In this article, we’ll explain why this is so. We’ll demonstrate why buying used makes sense, even if you could potentially afford a new car. And we’ll provide you with all the information you need to make an informed decision.
But first: The allure of buying new
Let’s, however, not deceive ourselves. Buying a new car is still a pretty amazing thing. There’s just something about owning a vehicle that no one else has driven yet. Especially today, when the average age of a car on the road is eight years, you can buy a new car and build up a long, meaningful relationship with it – from its first ride to the moment the proverbial wheels fall off.
Psychologically, it is also attractive that a new vehicle will provide you with the most up to date features. We’re living in a technology-dominated era, after all. And just like it feels more exciting to own the latest generation iPhone than, say, one of its (objectively still fine) predecessors, this aura of innovation can make a huge difference.
New cars: The benefits
But there’s more to a new car than psychology. For one, more advanced technology is actually a real, tangible advantage. It can help you steer clear of accidents, assist you in saving fuel and offer potentially life-saving support in case of an emergency. Although you’d expect cars to be mature products after 150 years of development, they’re still improving – and only by buying new are you getting the full benefits.
Another important point is reliability. Although most buyers realise that pre owned cars are usually great as well, they just want a little less hassle from their vehicle. With a new car, you can (in most cases) expect to remain repair-free for at least 3 to 4 years. With a used car, especially if it’s aged around seven to eight years, you may need to visit your garage a little more often. To many, this peace of mind is worth the additional costs.
Finally, you can specify a new car according to your personal desires. Used cars, on the other hand, already have certain features built into them, so making changes is more expensive and laborious. This may not seem like a big problem. But to quite a few drivers, it makes a huge difference to be able to customise a car and truly make it theirs.
Pre owned cars: Pretty amazing
Okay, so new cars are amazing. They feel great, they smell great, they’re more up to date and exciting. However, let’s get one thing straight: pre owned cars are pretty amazing, too.
Today, an odometer reading of 200,000 miles or more is nothing, really. Motors and other car parts were built to last that long or even longer, in fact, and they’re actually meant to be driven a lot. It is by no means an exaggeration to claim that some pre owned cars actually feel better on the road than their factory new counterparts.
If you’re buying from a dealer, many second hand vehicles are virtually indistinguishable from new ones. Dealers will routinely clean them up, make necessary repairs and perform a thorough check-up. We’re pretty sure that without prior knowledge, many experts could be forgiven for mistaking one of these refurbished cars for a recent arrival.
The benefits of pre owned cars
So, what are the main benefits of buying a pre owned car? Obviously, they’re cheaper, something we’ll get into more closely in the next paragraph. Older cars also depreciate more slowly. In fact, once they’ve passed the magic stepping stone of around 100,000 miles or ten years, they hardly depreciate at all anymore, based on their age. (condition becomes the main criterion then) This means that you could potentially buy a 12-year old car, keep it in great shape and then sell it after three years at the same price you bought it.
The market for used cars is also a lot more diversified than with new models. This can seem daunting at first. There is simply too much to choose from! But really, it’s a great thing: You can find the perfect car for you!
Ironically, if you invest enough time into research, you may be able to find cars that are actually more reliable than the latest versions. This is because, with pre owned cars, you can tap into vast amounts of reviews and user opinions. Sometimes, there can be vast differences in quality between two or three generations of the same model. The best of these are often even far superior to the latest models.
Many shades of used
The term ‘new’ is pretty much self-explanatory. Used, however, can mean many different things, depending on the actual age, mileage and condition of the car in question. With this in mind, it makes sense to group pre owned vehicles into different categories.
- The first category are used cars under three years of age. These cars are as good as ‘new’ by any reasonable standard. In some cases, they will even be under factory warranty. These cars will not be super cheap. But thanks to depreciation, they tend to be somewhere between 20-40% cheaper than a new model.
- The second category are three to five year old cars. These no longer have the ‘as good as new’ stamp of approval and for good reason: During this phase, the first few smaller repairs tend to rear their head. If there are smaller deficiencies, they will start showing up. The good thing is that these disadvantages shave off even more from the original sales price.
- Between seven and ten years, cars lose even more value. In the wrong hands, this is also when they start looking worse. On the plus side, you can often make a great deal here: Buy one of these vehicles at a good price, then perform a few minor repairs and improvements yourself.
- Once a car has celebrated its tenth anniversary, it is generally considered old. As we’ve mentioned, these cars can technically still be in great shape. However, before you rush in to buy one of them, you need to be aware that you’re taking a risk here. If one of these older used cars is in a bad shape, it could spend more time at the repair shop than on the road.
So which of these is right for you?
If it were up to us, no one would be buying new cars anymore. Of course, that’s technically impossible. But even if you do have the cash to spend several tens of thousands of Pounds on a car, buying a one year old model makes more sense.
By this time, any obvious problems will have manifested themselves. You still have roughly two years of warranty, so your risk of running into serious trouble is limited. And by all means, the difference between a new and twelve month old vehicle is academic at most.
But what if you’re strapped for cash, but would still like to drive a great car?
There are very specific age and mileage points at which to buy used
When considering the value of a vehicle, you can base your considerations entirely on mileage. Here’s how: Every car depreciates based on mileage bands of 20,000 miles.
What this means is that a car with under 20,000 on the odometer is worth considerably more than one that has 21,000 miles. At around the 40,000 miles mark, there is another cut off point, another at 60,000 etc.
If you consider that the average mileage of a car is 10-12,000 per year, then you can make excellent deals at the 5 year point, the 7 year mark and the 10 year mark. Always try to find a car that has just entered the next bracket to get the best deal, regardless of your budget. This way, you can optimise the costs.
Buying a pre owned car: What to look out for
When it comes to buying a used car, either through a dealer or a private party, it always helps to be prepared. But if you’re considering an older model, you really always need to take an expert or mechanic with you If you do and all goes well, you could get a bargain price for a still brilliant car.
If you do not have access to a friend with in-depth car skills, and can’t afford a mechanic, there’s the Internet, thankfully. There are plenty of useful check lists online, which can turn you from a layman into an expert very quickly.
Here’s one of the most useful we found: A compilation of 12 Things To Check Before Buying A Used Car, compiled by Canadian mechanic ‘Filthy Rich’ from Deboss Garage:
#1 Don’t buy it at night
#2 Check tyres:
#3 Check transmission fluid
#4 Check engine oil
#5 Check break fluid
#6 Check belts, corrosion, rust
#7 Check antifreeze
#8: OBD2 Reader: 0 Diagnostics
#9 OBD2 Reader: Readiness Test
#10 Listen for any noises while driving
#11 Check online reviews
#12 Call a parts store
These points sound pretty straight-forward. But that’s the great thing about them: You don’t need to be an expert to be able to verify them. And even an OBD2 reader won’t set you back more than a few Pounds.
If you would like to submit the car to a more thorough test, we have an overview of the best vehicle check lists for you.
Private versus dealer
Once you start researching pre owned cars, you’ll quickly stumble upon the main question: To buy privately or to buy from a dealer? Right now, just under two thirds of all used cars are sold by dealers. Whether or not that number is going up or down, remains to be seen. Either way, there is certainly a case to be made that the Internet will make buying cars privately more attractive.
One thing’s for sure, though: Dealers offer more security and protection, meaning your consumer rights are stronger. You usually get a (limited) warranty, too. Dealer cars are also more standardised in terms of quality. You may not be able to score an incredible bargain. But chances of getting a lemon are pretty slim these days as well.
Private sales usually lead to significantly lower prices. In many cases, sellers will leave the major repairs up to you. Or they may simply not be enough of an expert to spot the deficits. The risk of buying into a bad car are naturally higher. Thanks to online car history checks, however, this risk is not quite as big as you might think. By investing somewhere between £10 and 30, you can steer clear of stolen, badly damaged or clocked cars.
Which of the two options you should select is a question of personal preference. If your credit rating isn’t perfect and you need financing, meanwhile, a dealer is generally the better choice. We’ll get into that in a moment.
What about auctions?
For those strapped for cash, auctions sound like a great idea: What could be better than snapping up a dream car at a dizzyingly low price? A staggering 1.4 million cars are auctioned off each year – surely, there must be one for you in there as well?
Not so fast. As the Money Advice Service cautions, “auctions are one of the riskiest ways to buy a used car.” Granted, auctioned cars do come with some sort of warranty – but it’s very limited and usually only applies for 48 hours to make sure the car really came in the condition it was sold at.
Online auctions are even more risky, but then again, you can get some real bargains here. We expect this market to pick up quickly after the introduction of new mechanisms for consumer protection.
What to use the Internet for
If you really want to get a great deal, but without the excessive risk of online auctions, there is an alternative. Car prices at dealers vary significantly across the country. You can save a lot just by buying a vehicle in a different city. In some cases, it may even make financial sense to drive a few hundred miles to buy a car and ‘import’ it to your hometown.
One way of doing this is to define your maximum radius for buying a car, say 200 miles around your current location. Then, look for interesting cars online within that radius. You don’t need to take a decision straight away. Simply find a few good looking dealerships and then visit their website regularly for a few weeks until you find an offer that suits you.
Many people are weary of doing this, but there really isn’t a sensible reason not to expand your horizon. Don’t be afraid you won’t be able to service your car. There are plenty of independent garages in most cities. So you can always get help if you really need it.
How to finance the deal
So, let’s say you’ve found a dealer you trust and spotted a car that’s right for you and at a fair price. How to proceed?
Used car finance is not an entirely different animal, but it is a little bit different from new car finance. This is because you can get manufacturer discounts and attractive finance options with the latter that you simply can not negotiate with a pre owned car. There are plenty of stories to be found online where a new car was actually cheaper than a used one!
Also, it is a lot easier to get personal finance with a bank or credit union for a new car, since it can serve as a collateral in case you need to default on your credit.
So, especially if you have a less than stellar credit rating, your best option tends to be dealer finance. At Concept Car Credit, for example, we can offer deals for almost every budget. Just give us a call and we’ll work out a loan that meets your needs.