How it can be cheaper to buy a car new than second-hand
By Ray Massey for the Daily Mail 02:07 GMT 09 Feb 2013, updated 02:07 GMT 09 Feb 2013
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When looking for a good deal on a new set of wheels, a used car may sound like the best way to save money.
But motorists may in fact find a better deal buying a new car rather than its second-hand equivalent, research has revealed.
Car firms are so keen to shift new models they are offering hefty discounts to dealers, who can then pass savings on to customers opting for finance deals.
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As a result, buyers of a new Ford Focus can save more than £1,700 compared with a used one. Similarly a new Volkswagen Scirocco can be £3,200 cheaper than a second-hand one.
A Nissan Juke can be nearly £1,000 cheaper than its pre-owned equivalent.
The counter-intuitive findings are revealed from a study by motoring magazine Auto Express.
It gives the example of James Roxburgh from Guildford, Surrey, who wanted a Mercedes C63 AMG estate.
His local dealer had a year-old car with 7,500 miles on the clock at an asking price of £45,500 – almost £13,000 less than the price of a new model.
But after looking on the Mercedes website, Mr Roxburgh found the firm was financing a new car for less than the cost of the used one.
He looked at a finance deal known as Personal Contract Purchase where buyers pay monthly payments with the option at the end of paying a lump sum to buy the car, or handing it back.
Here he found that the monthly payments for the new car, at £599, were £99 higher than for the used version. However, the deposit needed was much less.
Mr Roxburgh than calculated that after two years, the used car would cost him £1,242 more than the new one.
Auto Express pointed out that the deal was made possible by Mercedes offering a new car discount and halving the interest rate it offered.
Shopping for a deal: Motorists may find a better deal buying a new car rather than its second-hand equivalent, research has revealed
Toby Poston of the British Vehicle Rental and Leasing Association said: ‘New car finance rates are usually better than those on used cars, because there is more marketing budget or discount available on new cars and this is used to subsidise the finance cost.’
The magazine’s editor Steve Fowler added: ‘Dealers also have wriggle room in their own profit margins to cut a deal. So it is always worth pushing a bit harder and haggling for that bit extra.’
And there is strong evidence the discount strategy is working. New car sales were up 11.5 per cent last month – propelled by a 15.9 per cent rise among private buyers.
Car makers are leaving motorists an average £120 a year worse off by ‘cheating’ over claims about the fuel-efficiency of their vehicles, EU watchdogs have revealed. Test techniques such as using tyres with extra traction or driving on an unrealistically smooth road give an artificially lower reading of fuel consumption and emissions, a European Commission study found.
As a result drivers could be paying up to £120 a year more in fuel, based on 8,500 miles of driving.
The study also said a recorded fall in CO2 emissions was down to the way testing was performed, rather than improved technology.