While some experts have expressed concerns about the long-term performance of the used car market, at present there is no doubt that it is continuing to boom.
This was particularly evident during the final financial quarter of 2016, during which time a staggering eight million used vehicles changed hands.
While many people are tempted to buy a used car as it is perceived as being cheaper, however, there are hidden costs that are worthy of recognition.
The Real Cost of Buying a Used Car
In this post, we will look at the real cost of buying a used car and three of the main factors that influence this:
The Cost of Inspecting a Used Car
Unless you are buying through a reputable dealership, you will need to invest in several checks to determine the merit and the value of the car that you are purchasing. Private vendors may not always declare the vehicles’ history, for example, and this can cause you to miss issues that could potentially cost you huge amounts of money in the longer-term.
So, while performing pre-purchasing checks may require an initial, up-front cost, this is extremely important and could save you huge amounts of money over time.
You should start by securing an HPI check, which will afford you access to a detailed report on an individual vehicles’ history and highlight any potential issues.
It is also worth paying for a physical inspection of the vehicle in question, as this ensures that it is fit for purpose at the time of purchase and has a viable MOT certification.
The Cost of Future Repairs
While inspecting a used car may minimize some of the risks that may be associated with this practice, it is inevitable that the vehicle will need some form of repairs in the (possibly near) future.
You will need to prepare yourself for the fact that repairs on second-hand vehicles may be more expensive, however, as various replacement parts may be harder to come across depending on the precise make and age of the car in question.
So long as you prepare for this and take proactive steps towards maintaining your car, however, you can negate these costs and make allowances for them.
The True Cost of Financing
If you do decide to purchase a used vehicle from a reputable dealership, you may well choose to do so through a finance agreement (depending on the cost of the vehicle in question, of course).
Interestingly, however, there is evidence to suggest that the interest rate for financing the purchase of a used car is typically 1% higher than it is for a new vehicle.
This is due to the various promotions and incentives that are usually offered on new vehicles, which can drive down the cost of buying a new car considerably. Lenders may also decide to apply an inflated interest rate to used car loans, as there is a slightly higher level of risk associated with buying such a product.
This is a true hidden cost of purchasing a used car, and one that can catch even the most experienced and knowledgeable consumer unaware.