Used cars - why are they so expensive?

If you need a new car and have decided to save money by opting for a used model, you may be in for a shock; used car prices have really shot up in recent months. 

In fact, you might be surprised to know that the price of second-hand cars rose by 30.5% in 2021, a trend which continues in 2022.

But why have prices risen so much?

The main reason for the sharp rise in the price of used cars is connected to a global shortage of microchips[2]. These chips are a key component for the features of modern cars, from infotainment systems to digital dashboards.

The lack of microchips has restricted the supply of new cars, with many car manufacturers quoting months-long waits for new models[3]. Similarly, shortages of other materials, such as copper, aluminium and cobalt, have also slowed the rate of production of new cars all of which puts more demand on the used car market. Anyone who is keen to buy a car is now more likely to turn to the used car market instead, therefore pushing up demand and leading to higher prices.

Big price rises

According to Auto Trader, the used car rising in value the fastest, over the last 12 months has been the SEAT Alhambra, which was 56% more expensive than it was a year earlier, rising to an average asking price of £18,873[4]. This was followed by a used Ford S-Max, which was 53% pricier, at £13,253 on average.

Among other used cars that have seen particular sharp price increases are the Toyota Auris and Skoda Yeti, both rising in price by over 50%.

It seems costs are rising everywhere right now, so what can you to do keep the costs down if you really need that second set of wheels?

How to save money on a used car

There are several steps you can take to help you get a good deal on a used car.

• Do your research and ensure you get value for your money
  If you’re considering a new set of wheels that won’t break the bank, we’ve gathered some of the best-value models on offer.
  
  
• Get the best price for your old car
  If you’re selling your old car, be careful to get a good deal. If you’re part-exchanging it, first find out what it’s worth by using sites such as Parkers. However, also consider selling it privately as you might get more money for it.
  
  
• Find out how much insurance will cost
  Car insurance costs can vary, even for similar seeming vehicles – so when you are looking for a car, be sure to get a quote for insurance before you sign on the dotted line.
  
  
• Get a used-car valuation for the car you’re seeking
  Use an online valuation tool, such as Auto Trader, to get an approximate valuation for any car you’re considering as this will put you in a stronger position as a buyer. 
  
  
• Be flexible
  It’s easy to get your heart set on a particular car. But the thrifty car shopper is flexible  and prepared to shop for less popular models in the pursuit of saving money.
  
  
• Haggle
  It can feel unnatural to some of us, but haggling can really make the difference when buying a used car. In fact, more than six in ten people get some money off the price of a second-hand car just by asking[5].
  
  
• Ask the right questions and do your homework
  A little research and preparation can improve your chances of getting a great deal and driving home happy.
  
  
  

For more useful advice, see more of our tips and guides
or Living & Lifestyle articles

[1] https://plc.autotrader.co.uk/press-centre/news-hub/retail-price-index-february-2022/

[2] https://www.bbc.co.uk/news/business-58993851

[3] https://www.thecarexpert.co.uk/why-are-used-car-prices-so-high-2022/

[4] https://plc.autotrader.co.uk/press-centre/news-hub/retail-price-index-february-2022/

[5] https://www.moneyadviceservice.org.uk/blog/how-haggling-can-help-you-pay-less-for-a-second-hand-car