How to buy or finance a used car

There are so many ways to buy a used car these days, not to mention the fact that you can have the option to finance a used car.

But, how do you do it?

In this article, we look at how you can buy or finance a used car, and the best way to do it.

How can you buy a used car?

There are quite a few ways you can buy a used car. These include;

Private advertisements

This includes websites such as Gumtree, Facebook Marketplace and Craigslist. The cars on these types of websites are usually sold by a private individual who simply wants to sell their car on.

Here are the advantages of this;

  • You can find something suited to every budget
    • Privately advertised cars on these platforms generally can range from £300 to £3000
    • Generally, more expensive used cars are sold by private sellers and are found on AutoTrader, Gumtree and the like
  • There’s room for negotiation
    • There’s a chance that you can get the price lower with a private seller
  • You can drive away with the car there and then
    • If you like the car then the chances are you will be able to pay for it and drive it away there and then instead of waiting for it to be delivered
Image of man holding phone displaying Facebook marketplace

However, there are disadvantages;

  • It can be time-consuming
    • Finding the right car at the right price can be a time-consuming activity, and it can take up quite a few Saturdays.
  • You can’t guarantee the cars history
    • If the seller cannot provide you with all the paperwork and documentation then you shouldn’t buy the car.
    • Though, even if they can provide you with the paperwork and documentation then you still can’t guarantee you know the full history of the car
  • You might have to look further afield
    • There’s a chance you might have to travel further to find the right car for you, rather than having it delivered.
  • You need to get your own checks on the vehicle
    • You may need to get a mechanic to look over the vehicle, this can cost money

Traders and Dealerships selling cars online

These you will normally find on websites such as Parkers and AutoTrader. This is where used car dealers sell many of their cars.

If you want to buy one of these cars you can contact the dealer or trader through the website and go from there.

There are many advantages to this, including;

  • You are more likely to know the cars history
    • AutoTrader do their own price check on the car and also offer a full car check for a fee
    • This includes confirming the mileage, any reg plate changes and an environmental report
  • You have access to trade clearances
    • Used car dealerships often have clearances which means you could end up getting a better deal than if you were to go through a private seller
  • There is often more choice
    • Naturally, because used car dealerships have more cars. So, you’re likely to find a wider selection
  • You can sometimes get a used car on finance
    • We’ll go into more detail about this below.
Car dealership with many cars aligned

However, there are some disadvantages

  • You might have to travel further
    • Again, you might have to travel further afield to find your car and the chances are you will have to pick the car up yourself
  • It’s time-consuming
    • The same as if you were going through a private advertiser, it can be a time-consuming process, especially if you have something specific in mind.

So those are some of the disadvantages.

What finance options do I have for a used car?

There are a few ways to buy and finance a used car;

Cash Purchase

This is the most popular way of buying a new car, and that’s simply buying it outright with the money that is already in your bank. You can read more about Cash Purchase here.

Bank Loan

Alternatively, you can get out a bank loan and use that money to buy the car outright. There are two types of loan, a secured loan and an unsecured loan.

A secured loan requires you to put down collateral. This is usually the most expensive thing you own such as your house or your car. If you default on a payment and can’t pay it back then the lender will take this piece of collateral.

An unsecured loan is different, however. It means that the lender will approve the loan based on your credit rating alone and trusts you to make the repayments on the same basis.

When applying for a loan, you need to check the APR. This is the Annual Percentage Rate and will tell you how much you will be repaying. The higher the APR, the more you will pay back.

Graphic of hand catching money

Hire Purchase

You can also get a used car on a Hire Purchase. This works the same way as if you were to buy a new car. So, you pay a monthly fee for a set period of time, and once that time is up, you own the car with nothing more to pay.

You can read more about Hire Purchase here, or watch our video below.

Personal Contract Purchase

You can also get a used car via Personal Contract Purchase. A Personal Contract Purchase works the same way as a Hire Purchase but with key differences at the end. At the end of a Personal Contract Purchase, you have three options;

  • Hand the car back (subject to condition and mileage)
  • Part-exchange the car – you will still need to clear off the final payment but any profit left will be yours to keep
  • Buy the car for a pre-agreed value (Guarantee Future Value)

This option is great for those who are undecided with what they want to do at the end of the contract. You can read more about Personal Contract Purchase here or watch our video below.

 

Contract Hire

It should be noted that it is rare to be able to lease a used car on Contract Hire. This is due to HMRC restrictions and lease companies putting restrictions on how old the car can be at the beginning of the contract. The rule is normally less than 3 months old and less than 3000 miles.

It is often cheaper to lease a new car, and you can read more about Contract Hire here or watch the video below.

 

What to look for when buying a used car

It is vital that you give your potential new car a thorough check. Because the car has already been driven for a few years means that there will be more wear than there would be on a brand new one. You don’t want to take it home only for it to end up in the garage a week later.

So here are some of the things you should be looking for when buying a used car;

  • Check all the documentation;
    • The logbook (V5C) (if they don’t have a log book don’t buy the car)
    • Check the owner is the registered keeper
    • The registration document should have a watermark (also check for spelling mistakes)
    • Check the VIN, engine number and colour match the log book
    • Does it have a full servicing and MOT history?
  • Check for mismatched colours that could signify extensive repair
  • You should check the tyre tread. Any tyres with less than 3mm of tread will need to be replaced which is an additional cost for you
  • Double check the seat belts work
  • Check all warning lights are working correctly
  • Check the brakes
    • Is the braking even?
    • Are there any odd noises when you brake?
  • Check the handbrake is in working order
  • Ensure the locks work properly, including remote locking
  • Make sure all windows and sunroof operate normally  
  • Double check the radio works – that could be a disaster.

Once you have checked all of those things and you are happy with the car, then you can go straight ahead and buy it.

Hopefully this has cleared a few things up in regards to buying or financing a used car. There are loads of ways you can buy and finance a used car, and we’re sure there is a way that is best suited to you. Whether you prefer negotiating on the likes of Gumtree or you prefer buying from used car dealers. There are also so many ways to buy and finance a used car, from buying it outright to getting a Hire Purchase. There is an option for every situation. We also hope this has given you some idea on what to look for when buying a used car too.

Image of a 4x4 car with call-to-action button overlayed.

Holly Martin

Content Co-ordinator at OSV Ltd
Holly enjoys: Reading, music and spending time with friends.

Within a week of Holly starting work at OSV she became an indispensable part of the marketing team. She's very intuitive and gets on with the whole office effortlessly.
Holly Martin

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