One in three new cars is cheaper than used models thanks to low interest rates
What Car? research shows used cars are not always the cheapest deal...
Discerning shoppers can save hundreds of pounds by buying a new car instead of a one-year-old version of the same model, according to new research by Whatcar.com.
Analysis by the UK’s biggest car-buying brand showed that competitive deals and low interest rates offered by manufacturers to shift their newest models can make brand new cars less expensive than secondhand vehicles.
With deposits, monthly finance or personal loan payments, VED, MOT test costs and depreciation taken into account, the analysis found that, contrary to popular belief, buying a brand new car was cheaper than a used car in almost a third of cases (29%).
This may also go some way to explaining the 13% increase in new cars bought on finance provided by dealerships in July this year.
One of the biggest savings to be found is on the Kia Picanto SR7 three-door. Buying a brand new model at £8845 will save customers £665 over two years. The total cost of a new Picanto SR7 over a 24-month period equates to £3719.00, whereas a one-year-old model would cost nearly £4400.
Another example is the Nissan Micra Acenta 1.2; it offers consumers a saving of £403 when buying new compared with a one-year-old model.
In addition, the savings you now make when buying a used model are fairly minimal. Buying a one-year-old Lexus NX300h Luxury will save you just £295 over 36 months compared with a new model, for example.
Jim Holder, What Car?’s editorial director, said: "Close analysis of the current sales market proves that if you do your research, in some instances, you could actually pay less for a brand new model rather than a used car.
"There are some great deals currently on offer, meaning consumers shouldn’t always assume a used car will automatically offer them the best value for money. Favourable interest rates combined with inviting manufacturer incentives mean it’s a great time to bag a brand new bargain."
What Car?’s research was based upon new car deals using standard Hire Purchase agreement or a Personal Contract Purchase (PCP), where an initial deposit is required along with set monthly payments for an agreed amount of time. When the agreed period is coming to an end, manufacturers often ask for a final lump sum payment in order for the customer to buy the car outright, or give the customer the option to sell it back to the dealer and agree to a new car with a new PCP agreement.
Signing up to a PCP does not always guarantee the cheapest deal. For instance, customers purchasing a Renault Twingo Play SCe 70 would save £1326.77 over 37 months using a high street loan for a one-year-old model.
However, thanks to attractive deals provided by manufacturers, it certainly pays to research current PCP rates. What Car? research highlighted PCP can save customers an average of £458.84.