Two of the biggest benefits of buying a used car are that they’re cheaper than new vehicles and their value depreciates slower. However, used cars aren’t as budget-friendly as they used to be as they’ve jumped in price by 2.3% since March 2022. As a result, the average used car price is now £17,720 and there’s been a 263% rise in people taking out car finance. So, let’s find out how to get more for your money when buying a second-hand vehicle.
Opt for a less popular vehicle
Supply and demand mean that popular vehicles, such as the Nissan Qashqai and Ford Kuga, are more expensive than less popular vehicles. Unpopular cars include the MG3 and Mitsubishi i-Miev. You can also save money by opting for a vehicle in an unfavourable colour. Maroon, pink, and cream cars made up just 1% of all car registrations last year. As not as many people want these coloured cars, dealers are more likely to drop the price of these vehicles for you. This is more likely to be the case if they’ve had the car on their forecourt for a while and want to get rid of it to make way for a new inventory.
Consider paying with a secured loan
As a general rule, the lower your credit score is, the more you’ll pay when taking out finance for a used car. 17% of Brits have had an application for a financial product rejected due to their credit score, according to YouGov. A low credit score can happen for many reasons, including failing to make a payment or a mistake on a credit report. If you have a low credit score, you can still get finance for a vehicle. One option is via a secured loan. A secured loan is a better option than an unsecured loan as unsecured loans can damage your credit score further. They also usually have a higher interest rate, so you’ll end up paying a lot more in the long term. A secured loan is a type of loan taken out against your property which is repaid monthly, as per the agreed terms. The typical cost of the loan will be 7 to 9% per year, and you can save money by reducing the length of the loan.
Pay off your car finance early
The Independent reports that Brits save an average of 20% of their income each month. It’s great to have savings to fall back on, but it’s worth using some of this money to pay off your car finance loan early. The interest rate on a car loan can range from 3.5 % to 30%, depending on your credit score. By putting extra cash towards your loan and paying back the outstanding sum early, you’ll save hundreds in interest.
Buying a used car today is a lot more expensive than it was a few years ago. But don’t let your investment ruin your personal finances as there are things you can do to save money and ensure you’re getting the best deal.
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