The average cost of buying and running a car in the UK has risen steeply. According to Autotrader, the value of some makes and models of used cars has risen instead of falling as the car has gotten older. Used Vauxhall Astras, Renault Meganes and Peugeot 307s have all increased in value by over 70% between 2019 and 2024.
In 2019, the average price of a new car, in the UK, was between £28,000 to £30,000. By 2023, the average cost had risen to approximately £32,000 to £35,000.
Add in the fact that people are paying more for repairs, maintenance, insurance, parking and fuel and you can see why so many are struggling to replace their cars.
Below, we outline ways to reduce the cost of replacing your vehicle. Some are pretty obvious, but we think you will also find a few that you have not seen before.
Consider using a PCP agreement
A significant percentage of UK consumers still buy their cars using a traditional hire purchase agreement. The majority do so mostly out of habit. They understand how HP works and find it easy to work out how much their replacement vehicle will cost. Often, when a dealer offers them the chance to use a Personal Contract Purchase instead of an HP contract, no is their automatic reaction.
That is a shame because, for some people, a PCP deal is actually a better option than hire purchase. The potential benefits include:
- Lower monthly payments – with a PCP agreement, part of the cost of the vehicle is deferred until the end of the contract period when a balloon payment is made. As a result, the amount paid per month is usually lower than it would be if an HP agreement were used.
- More flexibility – at the end of a PCP contract you have a choice about what happens. You can pay the balloon payment and become the outright owner of the car, hand the keys back and pay nothing more or set up a new PCP agreement for a newer car.
- An easy way to drive newer cars – using PCPs makes it easier for you to drive a newer car every few years.
Of course, there are cons too, and a PCP agreement is not the right choice for everyone. But it is an option that is worth researching further the next time you want to replace your vehicle.
Improve your credit rating
Regardless of how you choose to finance your new car, having a strong credit rating will reduce the cost. The better your rating is the easier it is to secure a deal that offers you a low APR and favourable fees. If your credit rating is not that good, consider delaying your purchase and actively working to improve your score, although there are providers who specialise in bad credit car finance.
Let someone else finance your new car
Letting someone else who does have a good credit rating buy the car for you is another option. For example, your spouse, partner, or a parent. The vehicle can be given to you as a gift, or the ownership details changed. If you do decide to use this option, make sure you understand how to do so legally.
Buy a less popular car
Buying a less popular make or model can save you hundreds and make finding a car easier. The same is true if you are not too worried about the colour of the car you drive.
Be prepared to travel to buy a car
Cars are cheaper in some areas than others. So, sometimes it is worth travelling a bit further afield to secure a better deal.
Start saving for your next car now
All of the above strategies work well. But saving up so that you can buy your next car outright is the approach that is going to save you the most money over the long term.
