You’ve decided to buy a used car. The price is attractive; it’s a reasonably high-spec model, and purchasing it won’t leave you high and dry by the end of the month. But, there are some risks to consider too.
Before you purchase any vehicle, you need to ensure that you aren’t sold something that will come back to haunt you later down the road. To ensure you don’t get caught out, we’ve rounded up 7 questions you need to ask before buying a used car:
What can I reasonably afford?
The UK used car market is booming, with one in three motorists opting for a secondhand vehicle. You get lower prices, and the depreciation hit is typically already taken care of by the previous owner. But, the cost might still be way over what you can reasonably afford.
So before you go marching down to the dealership or private seller’s home, draw up a budget. Look at all your necessary outgoings for the month, such as mortgage/rent, utilities, food etc., as well as unnecessary spending, and see what’s left.
Then, do a spot of research. Create a shortlist of the types of makes and models you would like, and then compare prices online. This will give you a clearer indicator of what to expect. Don’t forget that mileage and age can make a huge difference in price.
Can I apply for car finance?
Car finance is undeniably the most popular way to buy a car – new or used. It takes the financial burden of fronting the cash out immediately and lets you pay your remaining balance back in low monthly installments.
But unlike buying a new motor, only certain types of car loans are available when you buy secondhand. The most common are:
Personal Contract Purchase (PCP)
PCP is the most budget-friendly type of car finance. The monthly payments cover the cost of depreciation within your contract term and only requires a 10% deposit to get you started. And with any second hand vehicle, it has already lost most of its value compared to newer cars making PCP even more affordable.
PCP monthly payment covers the difference between a vehicle’s value at the beginning and end of your contract length.
As used cars tend to be cheaper to buy, you can make your monthly payments even lower by placing a sizeable down payment.
At the end of your contract, you have three options: make a final “balloon payment” (lump sum), and the car is yours, hand back the car to your provider or use any positive equity towards a new vehicle.
Hire Purchase (HP)
Another popular finance option is an HP loan. Like PCP, you place an initial deposit of 10% (or more if you’d prefer) followed by fixed monthly payments throughout your agreed contract time. Once all your payments have been made, the vehicle is yours with nothing further to pay.
Length of loan, down payment and the vehicle’s price will all determine how much your monthly installments are. But, here’s the catch. If the car you want to buy is already a few years old, it’s not advisable to borrow long term to cover the costs.
HP works out slightly more expensive than a PCP loan as you are paying the total borrowing costs each month. So make sure you compare APR and interest before signing a deal.
Personal Loan
If the other two options aren’t available to you, you may want to consider a personal loan from your bank, particularly if you cannot afford the initial deposit of a PCP or HP loan.
However, you will need an excellent credit score to apply, and interest rates can be higher than other finance options. Plus, you will be paying more monthly overall as you are paying for the borrowing in full.
Can the car be legally sold?
While a reputable dealership will be upfront with paperwork and answer your questions, a private seller might be less forthcoming.
Make sure you ask:
- Is the seller the legal owner of the vehicle?
- Can they legitimately sell the car?
- Is there any outstanding finance attached to the car? The car may be repossessed if the answer is yes
- Has it been written off?
You can check out most of the details by checking the seller’s identification against the owner’s details on the documents. If they are selling the vehicle on behalf of someone else, it might not be a legitimate sale after all. Walk away at any time if you feel uncomfortable.
How many previous owners has it had?
Resale prices can be severely affected by the number of owners a car has had. Everything from clocking up miles to different driving styles is all taken into account.
So if the vehicle you are looking at is more pricey than the slightly newer model down the road, you need to ask why.
What is the mileage?
Mileage and value go hand in hand. With the average UK driver clocking up between 7,500 to 12,000 miles a year, it’s a quick measure for assessing whether the car you are looking at has been driven more.
Compare the mileage on the dashboard to the most recent MOT certificate to ensure the vehicle hasn’t been clocked (altered).
The more a car has been driven, the more general wear and tear it will have suffered. So ask the seller what the vehicle was previously used for. Was it short commutes? Or longer drives? Just to the shops or casual trips?
Can I test drive the car?
Before you buy any car, it’s recommended that you take it out for a spin. That way, you can get a feel for how it handles on the road, listen out for any odd sounds, notice strange smells and find out if this is the right car for you.
If the seller (dealer or private) isn’t very cooperative, it’s time to walk away and look elsewhere.
Does the car have a warranty?
If you’re looking at a relatively new used car, it might still be covered by the manufacturer’s warranty. This is attached to the vehicle itself, so it will transfer to the new owner.
Remember that most cars over 3-5 years old are more likely to be out of warranty, and a private seller isn’t obliged to sell it with one.
Buying any car is a massive deal. But with the right questions up your sleeve, you’ll find the best car for you in no time.