Company News from yesinsurance
05 December 2006 "Avoid new cars," says insurer
For most British drivers, buying a new car is a waste of money, according to a warning issued today by insurance provider, yesinsurance.co.uk.
The company says that the immediate depreciation which a car suffers when it is driven away from the showroom, which can be up to 15% of its initial value, means that the purchaser will always make a large financial loss when they eventually come to sell it.
"For the majority of UK drivers, buying a used vehicle is a much better option, with both the rate of depreciation and insurance costs being substantially lower than those applying to new cars," said Paul Purdy of yesinsurance.co.uk.
One in four (25%) private motorists bought a used car in 2005, whilst almost one in ten (8%) bought a new one (source: Driver & Vehicle Licensing Agency). In total, UK motorists spent £36.4 billion on 2.4 million new and 7.5 million used cars last year, according to figures from the Society of Motor Manufacturers and Traders (SMMT).
yesinsurance.co.uk specialises in providing insurance for cars that are over 5 years old, which it estimates account for around 60% of all cars currently on the road. SMMT figures show that the average age of cars in Great Britain is 6.8 years.
"Around a quarter of the 30.6 million cars currently on the road are bought and sold as used vehicles each year," said Paul Purdy.
"For the majority of drivers, the rapid depreciation in value experienced by new cars means that a well-maintained used vehicle is often a much better financial option, but it is important that care is exercised in choosing the right vehicle," he said.
yesinsurance.co.uk recommends buyers take the following ten basic precautions when purchasing a used car.
Top tips for buying a used car
Mechanical check
In addition to giving the car a basic mechanical check yourself, it is advisable to get a professional inspection made by a reputable organisation. Organisations such as the AA approved DEKRA (0800 043 0999 or www.dekra-assured.com) and RAC (0800 975 5867 or www.rac.co.uk) offer 166-point tests which will typically cost between £100 and £300 depending on the type of vehicle and the extent of the test.
Status check
It is also advisable to obtain a vehicle status check, which will tell you if the car has been reported stolen, written off by an insurance company, or still has finance outstanding - all of which could cause you major problems. Three organisations which will do this for you are: HPI (01722 422 422 or www.hpicheck.com); Experian, which undertakes a car data check on behalf of the AA (0800 234 999 or www.aacardatacheck.co.uk); and the RAC (0800 975 5867 or www.rac.co.uk). The test will usually cost between £25.00 and £43.00. If you are having the vehicle checked mechanically, organisations such as the RAC will be able to offer you a cheaper all-in-one price which covers both this and the status check. Some of the above services may also be able to check if the mileage has been altered and give a guide to valuation.
Valuation
Glass's Guide is a good source of guidance on the valuation of vehicles. For £2.95 you can do a basic online check on the value of the car you are considering. To do so click here. It is also worth doing some research on the internet yourself to check what prices similar cars are being sold for; try websites such as www.autotrader.co.uk
Documentation
The vehicle must have a new style DVLA vehicle registration document, known as a V5C. Do not accept an old style V5 document, as these have now been replaced. Vehicles over 3 years old must also have a valid MOT certificate. Check that the VIN, or chassis number, on the VIN plate (found in the engine compartment) and the VIN (stamped onto the car body shell) match the number recorded on the V5C. Also check that the car tax is up-to-date and that the details on the tax disc match those of the car. Check the service history for proof of regular servicing and ensure that the mileage goes up in regular stages.
Mileage
Check that the condition of the car matches the stated mileage. Whilst these are not perfect tests, indications of high mileage can be shown by: shiny/worn steering wheel or gear knob; worn pedal rubbers; wear on the driver's seat; many stone chips on nose of car; excessive numbers of owners; loose, scratched or rounded screws on instrument panel, which may indicate that it has been removed in order to alter the mileage - known as clocking.
Quick checks
- Rust check: sills, wheel arches, seams, door bottoms, suspension mountings
- Check body panels with a magnet to find body filler
- Check that colour and texture of paintwork matches on all panels
- Check engine for oil leaks, damaged hoses, drive belts
- Check door, window and sunroof seals for leakage
- Damp patches in carpet could mean a rusting floor panel
- Check all tyres, including spare, for tread depth and damage/bulges
- Avoid checking the car in rain or at night as it makes bad paintwork look good
Test driving
Spend at least 20 minutes driving the car - but make sure you are insured to do so. Test the electrics, lighting and steering. You should also check that the engine idles smoothly and that smoke is not expelled from the exhaust, once the car is warmed up. Put the car in 4th gear and try to pull away; the car should stall - if it doesn't, the clutch is worn. Make sure that the brakes work effectively and do not pull to one side.
Your rights
Buying from a dealer can give you stronger rights than you would have when buying privately, but it will also usually cost you more. When buying from a dealer, the car will usually come with additional warranty or mechanical breakdown insurance, but this may have a limit to the amount of the claim, number of claims, and items that may be claimed. Both dealers and private sellers must not mis-describe or misrepresent the vehicle, but in a private sale there is a greater onus on you to ask the questions - and it can be more difficult to get compensation. This is why independent status and mechanical checks can be extremely useful. Some dealers masquerade as private sellers and work from home, so when you telephone them ask about "the car for sale", without specifying which one - if they need clarification, they are probably a dealer. Don't buy a car from someone who will only give a mobile number, as they will probably be untraceable if something goes wrong.
Insurance
When you are test driving the car, make sure that you are covered by insurance to do so. Once the car is purchased, shop around to get the best insurance deal, as some insurers will offer better prices on newer vehicles, whilst others are better for used vehicles. For example, yesinsurance.co.uk specialises in used vehicles - especially those over 5 years old - and will often be able to offer a very competitive rate.
Online information
In addition to the websites referred to above, sites such as that run by the Central Office of Information at www.direct.gov.uk/Motoring can also offer useful advice
