The Benefits of Buying a Used Car on Finance
As you have passed your driving test, you can finally buy a car of your own! Before you get too hasty on purchasing a brand new car, you will need to take a step back and consider if that is the best option. Read on to discover several reasons why opting for a used car is often the most sensible thing to do when purchasing your first car.
What are the benefits of buying a used car on finance?
You don’t need to go overboard on spending money since it’s your first ever car, and, most importantly, a used car is much cheaper than buying a brand new one.
The reason why a used car is less expensive than a new car is due to depreciation — the difference between the amount you spend when you buy a car and the amount you get when you sell or trade it for another vehicle. Every car depreciates differently, and the price depends on how much the car was worth in the first place.
Typically, a new car loses around 60% of its value after three years if they are travelling approximately 10,000 miles per year. Therefore, if you find a car that’s more than three years old, you could save yourself a hefty sum of money.
Get More for Your Money
You can find a used car that you are content with and get more worth out of your money. Instead of going for an affordable new car in a basic model, you can find a top-of-the-range car that’s an older model for the same price. It is always good to carry out some research on used cars and see if they fall within your budget range.
Perfect for Novices
Since you don’t have many years of experience in driving, a used car would be the best choice for your first set of wheels. Accidents are more common in new drivers, particularly those who splash out on expensive wheels that are not suited to their driving abilities.
Moreover, as an amateur driver, you may get into a minor accident and find scratches or dents in your new car — not a pretty sight, right? With used cars, this is not so much of a problem as the value has already depreciated somewhat. As such, it is better to polish your skills and learn how to avoid minor accidents on a cheaper used car. When you’re more confident and proficient in driving, you can upgrade to your dream set of wheels!
Slower Depreciation Rate
The rate at which a car depreciates tends to slow down based as it ages. Usually, by the first year, the value of a new car will drop by 40%, and by the third year, it will lose 60% of its original value.
However, if you opt for a used car, the cost will depreciate at a slower rate than new cars. So when you come to resell the used car, you will not lose half as much money.
Variety of Cars
When you are on a budget, there’s only a handful of options you can choose from in the new car market. On the other hand, your choice isn’t limited when you’re looking to buy a used car – you’re opened to a wide variety of cars within your budget.
Where can I buy a used Car?
Browse around for the cars you would potentially buy at several of your local dealerships. When it comes to buying the car, never pay the list price of the used car. It is expected to haggle with the dealer and get the price lower, so don’t be shy! Also, make a note of the best price you have negotiated with other dealers, and ask the current dealer to beat it. Take your time to think about the best car to invest in, as you can return to your local dealer and ask if they’ll match the best offer. However, if you’re buying online, your opportunities to haggle are limited — it’s better to meet the dealer in person and try to lower the price.
Buying a used car from a private seller is generally a lot cheaper than from a dealer. However, buying from a dealer gives your extra protection, as the car has been checked over and approved to be fit for reselling.
With that in mind, buying a used car from a private seller is the cheapest way if you’re on a tight budget, but you need to be very careful. It is your responsibility to make sure the seller has given an accurate description of the car — ask for a confirmation via email, or keep a copy of the original advert for reference purposes.
Also, before you agree to make a purchase, you should do a thorough examination of the car, take it for a test drive, check the car’s history and ensure that all the right documentation is provided.
Used Car Finance Options
Once you have inspected that the used car you’d like to purchase is in good condition and you have all the correct documents, you need to figure out how you’re going to buy it.
If you’re buying a used car from a dealership, you do not need to make the full payment immediately. The two most common used car finance options that the dealers will offer are Hire Purchase Agreements and Personal Contract Purchase. The terms vary slightly for each, but for both financing options, you have to pay an initial deposit and a fixed amount of monthly instalments. Another option is that you can look for car finance providers to help you finance the car that you want to buy – they can even lend money to people with no credit or poor credit.
You will need to finance the used car yourself if you choose to buy from a private seller. As the car tends to be much cheaper, the vast majority of private car sales are made with upfront cash. In some cases, if you have a solid credit score and a good relationship with a bank, you could be entitled to a vehicle loan or personal loan.