PRESENTER: Good evening, everyone, and welcome to tonight’s lecture in our six-part Consumer Power series. We will be discussing purchasing a used automobile. You know, many people are scared of buying a used car…raise your hand if you feel that way.
I see many hands going up, and I’m here to tell you that there’s nothing to fear. Up until ten or fifteen years ago, well, there was a reason to be afraid. Unless you were an expert on automotive mechanics, there was no way of knowing whether or not the vehicle you were buying was a lemon. Even after taking a test drive, problems could have been lurking that could potentially cost you hundreds, if not thousands, of quid down the road. Nowadays, though, there are lots of factors that protect consumers from such pitfalls.
For starters, every vehicle has what’s called a VIN – the Vehicle Identification Number. It’s unique for each car…and why it’s useful is because repair shops and insurance companies keep records of all damage and extensive repairs that have been occurred with a vehicle. There are companies that, for a nominal fee of course, will provide you with a vehicle’s complete history in a matter of seconds. This is a great way to get some piece of mind.
Nonetheless, if you are in the market for a used car and you don’t consider yourself an expert on the matter, one thing I recommend is, once you’ve picked out a car you like, visit a mechanic to have it checked out before you agree to a sale. Any reputable seller will allow you to do this, and if they balk at the idea, just leave, because they’re trying to hide something. It’ll cost you in the range of 50 pounds to have this done, but spending a little bit of money early on will save you a lot of money down the road.
If the idea of going to a used car lot still gives you pause, then I have a solution for you. Most major car manufacturers offer what are called certified pre-owned vehicles. These are cars that have typically been leased by one person and then returned to the company once the lease period has expired. What’s great about these vehicles is that, since they are being resold by the manufacturer, they are covered by the manufacturer’s warranty, which usually lasts for the first hundred thousand kilometres. All in all, it’s a great deal for those who want a low-risk buying experience.
I haven’t talked about the financial benefits of buying a used car. Well, clearly it’s cheaper…but do you realize how much cheaper? The moment you drive a new car off the lot, it depreciates in value by an average of 10 per cent. Within a year, new cars have lost 30 per cent of their original value, and that trend continues year in and year out until five years later. What does that mean? Let’s say you bought a new car for twenty thousand pounds. Well, after five years, that car’s gonna be worth less than 40 per cent of what you paid for it! From a purely financial standpoint, buying a new car is absolutely mad.
The last question to ask yourself is how you’re going to pay for a used car. Cash is king…if you are able to pay for your vehicle in cash, you can negotiate the best deal possible. However, if you need to take out a loan to finance your purchase, I have some tips for you. Once you have an idea of which car you want and a ballpark figure for the price, go to your bank, or contact several banks, and determine what interest rate they are willing to offer. The banks will give you an offer sheet, and it doesn’t commit you to anything. Take the best offer you’ve got along with you to the dealership. Dealerships also offer financing to used car buyers, and they’re often willing to undercut the offer a bank made…they’ll give you a better offer…in order to make you a customer.