If you need to stay mobile and save money during the cost of living crisis then what are your options? We consider these below based on whether you own, finance or lease a vehicle currently. We also set out alternative vehicle usage approaches that could help you save or make money.
We cannot stress the importance of conducting research before changing your current driving arrangements. Dedicate some time to consider and research your options. Establish the best ways to improve your finances through vehicle usage, but also consider the risks and opportunities. For help with research use Total Car Check’s used vehicle buying advice and free basic check.
I own a vehicle
If you own a vehicle then you are in a position to cash it in and improve your finances. This is an option even if you’ve purchased it using a personal loan that you are still paying off. There are a number of ways you can sell your vehicle – from advertising online to using firms that will purchase it for cash.
Selling is fairly straightforward. The difficult part is establishing how you stay mobile after you have sold and if this improves your financial position.
Things to consider when buying and selling vehicles
Get a vehicle valuation
A Total Car Check Gold Check provides market valuations. You can use our Gold Check to price your vehicle for sale and see if any you are considering buying are priced appropriately.
Set price targets
Consider what sort of profit you are looking to obtain from the sale/purchase arrangements and what prices to sell and buy would be needed to achieve this e.g. I want to sell my vehicle for £10,000 and buy a new vehicle for £8,000. This will help you to stay more disciplined throughout the research process.
Consider what protection you need to give you peace of mind
By ‘protection’ we mean anything that protects you from costs further down the line. This could be guarantees, warranties and other insurance products that prevent the process leading to false economies. You could make money in the short term but incur ongoing costs if the vehicle is unreliable.
Use Total Car Check’s free local market check tool
If you have a number of vehicles you have shortlisted to buy then register or login to our website or app and run a free basic check. This now includes a new tool to enable you to see similar vehicles on sale locally by retailers. The tool not only provides you with new leads but enables you to check prices against the local market.
Consider the channels you use to buy and sell
Buying and selling privately usually leads to the biggest gains but can also presents bigger risks. It will also mean you need to dedicate more time to conducting research. Running a Total Car Check Gold check is a must for any new purchases.
Sell and trade down
By ‘trading down’ we mean selling your current vehicle and buying one that is cheaper and therefore likely to be either older, has more mileage or is in worse condition. This process provides an opportunity for you to make a sizeable sum of money. Your gains will depend on the value of your current motor and how cheap the vehicle is that replaces it. Now is a good time to sell, with used vehicle prices remaining high and strong demand. If you do your research you can find a used vehicle that is reliable and cheaper than the market average.
Sell and buy a more economical vehicle
Replacing your vehicle with a more economical model is another option. Worthwhile if you are moving to a clean air zone or struggling with high petrol or diesel prices. To achieve lower fuel costs you may need to invest up front, but will save over the long term. Total Car Check’s free basic check provides fuel economy figures and pence per mile costs for running vehicles.
Sell and finance or lease
Another option is to sell your vehicle, pocket the funds and finance or lease a new vehicle. This will enable you to gain the full sale proceeds of your current vehicle. You could use some of the funds as a deposit or advanced payment towards your new vehicle. It’s an option to consider if you can afford the monthly payments and need some extra cash. Your credit rating will determine whether you can access the best rates available. To keep monthly payments low you will also need to commit to a longer term to repay the funds. But this will leader to higher interest costs overall.
Finance versus lease
Financing a vehicle tends to give you more rights than leasing. But leasing typically offers the lowest equivalent monthly cost. If you are concerned about your job security financing a vehicle is usually a better option because you have the right to terminate the agreement mid-way through and only pay half the costs set out in the finance agreement. Terminating a lease agreement before it ends can lead to hefty penalties, requiring you to pay significant fees unless you have special insurance in place. Some leasing providers offer redundancy insurance for example that covers you if you lose your job over the hire period.
Join a car sharing club / scheme
If you own a car but aren’t using it much then sharing your car could be a good option to earn money. In these circumstances individuals who need temporary access to a car can rent yours and you pay a fee to the car sharing club. The club acts as a broker, facilitating the rental arrangements, payments, insurance and other protections. If you search for a car club or sharing scheme in your browser you will see local and national businesses that can set you up.
Sell and subscribe for a vehicle
An alternative to financing and leasing is to join a subscription service to use a vehicle. There are both new and used car subscription services now available which give you flexible access to vehicles. It works in a very similar way to hiring a vehicle but over a longer period. Subscription services can be more expensive than financing or leasing, but you can set up shorter terms of use such as 3, 6 and 12 month options and in some cases change the vehicles you use. This option therefore is perfect if you only need use of a vehicle for a short period of time e.g. if you start a fixed short term employment contract and you only need a vehicle to drive to work.
I finance or lease a vehicle
If you already finance or lease a vehicle and you are struggling financially then there is more help available now than there was before the pandemic. The Financial Conduct Authority (FCA) implemented new regulatory guidance that requires lenders and leasing companies to tailor the support they offer to your situation.
Ask for forbearance support from your lender
If you are out of options and cannot meet your monthly repayments then you should contact your lender or leasing company straight away. There is a whole host of support measures that can be offered such as reducing your monthly payment through removing interest or lowering payments for a period of time, deferring payments and extending the time you have to pay. More information is provided on the FCA’s website here.
Alternative options
Keep the vehicle you are financing
These days much of the UK car market is built upon the ‘change cycle’. You finance or lease a vehicle and then at the end of the term go on to finance or lease another. Great if you want drive a new or nearly new vehicle all the time. But if this is you then you may be better off breaking the cycle and keeping the vehicle. This is especially true if you have paid for it using a personal loan, hire purchase or conditional sale agreement e.g. you already own the vehicle or will do at the end of the term with nothing more to pay. Most modern vehicles are built to last if they are serviced and well maintained and you will no longer have to pay those monthly finance payments.
Improve/repair your current motor
If your vehicle is becoming unreliable then buying a new one may not always be the best option. It all depends on what the issue is and how expensive the repair will be. There are a range of vehicle diagnostic services available with many mechanics offering home visits. This can help you determine what the issue is. Once you know you can then get quotes from local garages or use online garage broker services. This process can help you establish if a repair is a better option than buying a new motor. It’s worth doing some research by getting a range of quotes as the cost of repair work can vary significantly.
Sell and resort to public transport
A last resort. Selling your car and using local bus, tram or train travel could enable you to get from A to B while giving you some much needed up front cash. This option is however only really plausible if you live in urban and suburban areas or where transport networks are well established.
