This Guest Blog is written by Jane Whittle, the Marketing Manager of ACF Car Finance Limited.
We all know about the massive savings to be made when you buy a used car. But there are even more reasons why a new car can be a no-no for many motorists and here are just some of these to illustrate why second-hand cars are now the first choice for many foxy lady drivers in today’s economy.
My girl friend Jill was looking crestfallen. Earlier that day, she had kissed goodbye to £12,500 for a new Ford – and that same afternoon, I had bumped into her (not literally, you understand) in Tesco’s car park. I had to admit, her new silver Fiesta did cut quite a dash, and on the back seat I could see the bouquet of flowers and bottle of bubbly she’d been given by her grateful dealer. So why the long face?
The high cost of depreciation
“Do you know what, I’ve just heard a programme on the radio about buying cars…” she confided in me. “And it said that the value of a new vehicle can drop by up to fifteen percent as soon as it’s driven off the forecourt. That means I’ve already spent nearly two thousand pounds today, and I’ve not even started shopping!”
I had to sympathise, but as my job involves helping people to buy used cars – especially if they have a less than spotless credit history – I was hardly surprised. Jill, of course, was completely right: the minute your shiny new car drives onto the tarmac outside the showroom, it becomes a second-hand vehicle and an awfully large chunk of cash has suddenly disappeared from its re-sale price.
And I’m afraid the depreciation story only gets worse. In the first three years of its life, a new car will lose approximately 40 percent of its value. In Jill’s case, that’s £5,000 disappearing into thin air.
All of which, you might think, presents a pretty powerful argument for going without the free bunch of flowers, buying a used car instead and arranging for daily deliveries of rare orchids with some of the savings. You’d be right, too. But in fact, the benefits of buying second-hand go even deeper than that, and suggest why more people than ever now go down the used car road.
Forget the savings for a sec, and let’s look at the improved motoring lifestyle which can come with a used car. Buying new, you might well have to forego all those tempting toys and higher-grade models to keep within budget – but at a used car level, they come much more easily within grasp. Extra features, such as sat-nav, heated seats, a bigger engine, or more luxurious trim suddenly count for a lot less after the car has left the showroom.
What may have added literally thousands to the price of a new vehicle can fall away to almost nothing once the car is a few years old. The premium for all those extras may total just a few hundred pounds – or less – compared with the price of a standard second-hand model.
You might even be able to move up a whole class of car on the basis of the much keener prices.
Be sure to factor in the cost of insurance
Insurance is another area where second-hand holds all the trump cards. Although a new car’s value does plummet like a stone from the moment you take possession, this actually doesn’t hold much sway with insurance companies. From their point of view, they will have to shell out at the almost-new value if you have an accident the following month, and their premiums reflect this.
Remember too that insuring a used car is often much more affordable for younger and more mature drivers.
Do your homework about car reliability
There’s something to be said for the peace of mind which can be gained by buying second-hand. Just consider: whatever make and model you choose, there will be more on-line reports and reviews available to read about than you can shake a gear-stick at. Be they owner-satisfaction reviews or write-ups by motoring journalists, you’ll very quickly get a very clear picture of any given car’s strengths and possible quirks.
In other words, you can make an informed decision based on the experiences of others – and that will give you a pretty good steer as to the model you’d most likely to have a relationship with.
Sadly, no such reassurance is available to the buyers of new cars which have been recently launched onto the UK market. How often do we read of recalls to rectify faults, and of shortcomings and problems which are only picked up after the car has been in circulation for a year or so, and which are corrected in subsequent models. Bad luck if you were one of the first in the showroom in these circumstances…
“Ah-ha!” some may say. “But despite all this, isn’t a new car bound to be more reliable than any vehicle with miles already on the clock?” Actually, the answer is often “No, not at all” – as many owners of factory-fresh models will probably agree.
The fact is, a lot of new cars arrive with built-in niggles which can mean repeated returns to the garage in the first couple of years. The manufacturers call it “snagging” – but owners may well have another less polite description after their umpteenth return visit to try and discover why third gear makes that peculiar whining sound.
Almost invariably, all these minor irritations will have been ironed out on a car over a year or so old.
But what about more scary component failures like the transmission or clutch? Well, perhaps a few decades ago these might have been a genuine cause for concern, but in the intensely competitive motor market of today, makers can’t afford to have their reputations tarnished by poor reliability, even after the car has travelled tens of thousands of miles.
Higher manufacturing standards and computerised engine management systems mean that major components last longer, and any possible problems can be picked up and remedied before disaster strikes. If by any chance there was an engineering fault somewhere on the vehicle, the likelihood these days is that it will be made apparent by the computer early in the car’s life. Once again, that headache is likely to fall on the original owner, not the car’s subsequent buyer.
Having said that, it is of course comforting to know that someone else will pick up the tab if anything does go wrong – and that is what warranties are for. Believe it or not, some warranties available today to protect a pre-used car are just as comprehensive as the original supplied by the manufacturer. Warranty supply has also become a fiercely fought-over market which has resulted in many excellent deals becoming available to consumers.
As always car safety is paramount
Safety is something which nobody wants to do a deal with or to make compromises on. However, the good news is that buying second-hand is generally not going to mean getting second best levels of protection. The drive by manufacturers to make their cars safer has been in top gear for some time now, and the safety features on new cars have not changed radically over the past few years.
You might now be wondering why there are any new cars at all to be seen on the roads today, and it’s certainly a fact that ACF Car Finance – which deals exclusively in used cars – sees its customer numbers growing.
But don’t worry: there will still be plenty of second-hand cars coming on-stream in the years ahead. Increasingly though, I suspect, their original owners will be fleet-buyers from companies which can negotiate hefty discounts from dealers, and who find it simpler to manage their vehicles by arranging one-stop finance, servicing and buy-back packages.
For the rest of us, buying second-hand has never looked like a more sensible and economical proposition than it does today. Less outlay, more car, better peace of mind. What’s not to like?
Of course, I didn’t have the heart to explain all this to Jill who, in any case, was now busy crossing off all the unnecessary luxuries on her shopping list. And who knows: in a few years, I might just be in the market for a silver Ford Fiesta with only one lady owner. And I’m sure the price will suit me down to the ground!
About ACF Car Finance Limited
ACF Car Finance Limited is Britain’s leading supplier of high-quality used cars to people whose credit status might otherwise prevent them from obtaining vehicle finance. There is a huge choice of makes and models on display at its regional showrooms – and each car comes with the benefit of a full 136-point vehicle quality inspection and interior/exterior valet.
ACF Car Finance has recently received a platinum award from the Institute of Fundraising for charitable donations made through its staff payroll scheme. ACF is committed to the highest standards of customer care and friendly, professional advice as provided by members of its fully-trained team.