Even if you can afford to buy new, buying a car second-hand makes a lot of financial sense. This is simply because the initial and largest amount of depreciation has been incurred by the first owner; part of that is due to the additional 20% VAT paid when buying a new vehicle. The VAT can only be claimed back if you are a business user.  Therefore as a secondhand buyer you will enjoy cheaper motoring than would otherwise have been possible. This money you save now can be used for investing elsewhere to help achieve your other financial goals – and that’s the time when you can afford to be more liberal with your spending habits. And don’t think buying second hand means you have to sacrifice buying a decent car – there are plenty of well-priced desirable ones out there.

Firstly because there are bargains to be had buying privately that you don’t get buying from a dealer or garage. It fits the masterMONEYsimply ethos of optimising your cash, and means you can use those saved funds for investing elsewhere towards other financial goals. Another big advantage buying privately is the ability to meet the owner of the vehicle. You can determine whether they are the kind of person who might have maintained the car well and can feel confident buying from. You can ask them detailed questions about the car, such as how long they’ve owned it, where they bought it from and details on it’s mechanical history. A dealer will never be able to provide this level of history and detail about the car like the previous owner. Consider this also – you can learn a lot form the kerb appeal of where the car has been homed – has it been garaged or is it parked on a busy road? Ask to go inside their home to visit the toilet so you can get a sense of how they live. If it’s clean and tidy the chances are they have looked after the car the same way. How long has the current owner had the car? If they have owned it for a long time this is normally a good sign. Better still if it’s one owner from new. Are they a smoker and do they have pets that have travelled in the car? Pet odour and cigarettes smells are not pleasant and can be difficult to remove. Have a look at this RAC article that explains the 6 ways that knock value off your car. The same applies to what you should be looking out for when you buy one.

It’s worth noting that buying from a garage does give you more legal protection in the event of problems that may occur later, but you pay a high price for that. You can however negate a certain level of the risk from buying privately by having the car independently inspected by a motoring organisation such as the AA or RAC. If you are paying many thousands for a secondhand car it is certainly worth the relative small cost of having it professionally inspected for the peace of mind it will bring you. If you decide this make sure at the time you agree the deal that the buying price is dependent upon the result of a successful inspection. Be prepared that buying privately can be a time consuming exercise. You should consider whether you have the time available to effectively follow through the process. If you don’t, then it might not be worth the effort or risk.

The first point to remember – only buy a car that fits your budget. Stick to it and don’t get carried away by the romance of a dream car! Decent cars can be bought for little money and there is no shame in delaying your dream car until a later date when you have had time to save up for it! An important part of buying your car is making sure you buy the right car in the first place ie. It’s both desirable to you and practical in the long term. That way it should last you many years – and in the process, save you large sums in the long run because your overall depreciation costs are reduced over time. For simplicity, I’ve split the car buying process into five steps:

1. Decide your budget and choose your car
2. Search for your ideal car
3. Call the vendor and conduct online checks
4. View, inspect and go for a test drive
5. Agree a price and make the transaction

Your budget will ideally be based on what you have either saved up for or funds readily available. Alternatively if this is not possible, it should be based on what you have agreed to borrow from a reputable finance company on favourable terms. You will therefore know what funds you have available to begin choosing an appropriate car. When choosing your car, balance your priorities between second hand prices, functionality, needs, safety, reliability and overall running costs including depreciation and other costs. You need to weigh these against your budget. The following sources will help to identify a shortlist of suitable cars:

• Car magazines
• Cars you see on the road
• Motoring websites
• Local car dealers

Asking friends, family and work colleagues for recommendations may also prove helpful. To assist you further, here are some online guides that will help.

Safety

For the consideration of safety when buying your car, the Money Advice Service provides useful information on which of the latest cars are deemed the safest to drive, click here.

Depreciation

They also give information on how to reduce your depreciation costs here.

Reliability & Owner Satisfaction

Use the following links from both the Money Advice Service and Autoexpress to determine the best cars based on reliability and owner satisfaction.

Tax

Don’t forget to consider the costs of taxing and insuring a car before you make the final selection and begin your search. This government website can be used to calculate the amount of tax you need to pay. Online websites like Autotrader allow you to search using filters such as Annual Tax and Insurance Groups. These filters can be enormously helpful.

Use the filters on Autotrader shown above to get to know the market for your selected shortlist of cars.  Search each car on your list individually and compare the prices that are returned from your search based on model specifications. Widen the search criteria if you need more data. All this should arm you with enough information to whittle your preferred list down to just a few.

You’ve got your shortlist of cars. Now it’s time to search for those suitable to view. There are many different ways to do this. This article by Autoexpress, under ‘Finding Your Car’, examines some useful sources to find your privately owned car for sale. It provides a helpful list of what to look for in a classified car advert – I’ve made a template of it below to use as a reference tool and checklist when scanning car ads.

• Car make, model, engine size (and name), plus trim level.
• Registration number (on the number plate)
• Cost of taxing the car
• Date of last MOT and test number
• Last service date and service history
• Mileage
• Colour and type of paint finish
• Standard equipment/option highlights
• Where and when the car can be viewed
• Contact details/telephone numbers
• The asking price
• Clear, detailed photo

Mark any missing items from the list above for any adverts that interest you. Use it to guide you on what questions to ask when you call the vendor.

First, before you view anything, there are some important investigative jobs to do. It’s critical you do this – thorough checks before you buy will pay huge dividends later. It will also save you the time and cost of wasted journeys. Call the vendor shown in the advert and a good tip is to say “I’m calling about the car you’ve got for sale”. If they are a dealer posing as a private seller, they will need to ask you which car you are calling about. That should set alarm bells ringing as to why they are not an honest trader. It can be useful to find out how long the seller has been marketing the car. If they have been trying for a long time it raises questions about the desirability of the car, or perhaps the vendor is selling at too high a price. This is a good opportunity for me to advise you to be wary of any vehicle that has not been used for long periods, standing idle. It’s not good for an engine, causing parts to rust and deteriorate. Ask why they are selling, who used the car and when it was last driven. In addition to any questions you need answering from your advert checklist, you need to find out the following information that is unlikely to be advertised:

• The 11 digit reference number from the V5C registration certificate
• MOT test number

This information is required for the DVLA and MOT checks that will be necessary next. If the seller refuses to give you these extra details over the phone they might have something to hide.

Check the car’s details with the DVLA

After the phone call you must do some online checks to verify the vehicles DVLA records and MOT history. Use the DVLA’s free online vehicle information checker to make sure what the seller tells you matches the DVLA’s records. It’s important to make sure the car’s history and credentials stack up correctly. The DVLA checker will confirm the tax rate the vendor has told you using the 11 digit V5C reference number. If any details don’t match, contact the vendor again and ask them to kindly clarify them – it might be a simple mistake. But if you’re suspicious that the seller gave you fake details don’t proceed with the car, move on to the next one of interest.

Check the MOT history

For cars more than three years old they must have an annual MOT (Ministry of Transport) certificate to make sure they meet road safety and environmental standards.  Without this, they can’t be insured or driven legally on the road. The longer the period before the next MOT is due, the better. You can check its MOT history by logging into the free MOT Checker using the vehicle’s registration number. Looking at the MOT shows the reasons for any failures or advisory items identified, as well as the recorded mileage at each test. It will help you to verify the mileage provided by the vendor and any suspicious mileage differences between MOT’s. You should check that MOT tests have been done regularly throughout the car’s history. All this information helps you build a profile of the car. It pinpoints whether the car has been looked after and not ‘clocked’ so is well worth the effort. Gone are the days when the car’s odometer could be wound back with a judiciously applied drill. Today, criminals can access the car’s electronic brain and reset the mileage in seconds. Ask the vendor about any unusual gaps between MOT’s – don’t continue with the deal if you’re suspicious of the MOT history. A car might not have needed an MOT if it was unused for a period of time and was registered as SORN (statutory off road notification) – this could however be a different cause for concern as I’ve mentioned. Knowing the 11 digit reference number from the V5C document will enable you to view the MOT test locations. This can be helpful to build a picture of the car’s whereabouts. Make sure the certificates show the same chassis number and vehicle registration as the car itself. As a final piece of online research, you could also do a Google search of the vendor’s telephone number.  It may bring up some revealing and surprising results.

Take screen grabs of the advert

If the car passes the online checks it should give you confidence to view it. Before you do, it’s worth taking screen grabs and saving copies of the advert. The purpose of doing this is to provide corroborating evidence in the event anything goes wrong.  When I discovered there was outstanding finance on my car it proved invaluable later to have the adverts saved on my laptop –alongside other data such as text messages, phone calls and a receipt, the financing company could see that I was a legitimate person caught up in a crime as an innocent purchaser. The advert screen captures became important pieces of material to build my case.

Once you have completed all the online checks, you are now ready to view the car. It’s advisable to take with you at least one other person – ideally someone knowledgeable about cars. The more eyes to inspect the car the better.  Before you arrive you might want to agree between you who checks what, and how to plan the exercise efficiently. If possible try to arrange to view the car in the dry. A wet car with raindrops on the paintwork can conceal a variety of scratches and dents. Always inspect the car in good daylight when it is possible to see everything clearly.

Evaluate the vendor as well as the car

When you view the car this is also your chance to assess the vendor’s trustworthiness. Always view the vehicle being sold at the home of the vendor, as shown on the V5C/logbook – not from a car park, motorway service area, lay-by or any other location.  Any suggestion by the vendor to view the car at a different location should cause alarm. Check the details of whom you are buying from carefully.  Confirm who they are with proof of identity – a driving licence or passport is ideal. Genuine people don’t mind purchasers carefully checking. Don’t be tempted to attend anywhere else or speak to anyone other than the person listed on the V5C/logbook, however plausible the explanation might be. It is essential to be continually aware of the many kinds of cons that fraudsters will try. For example, it has been known for a vendor to even wait on the pavement outside an address, to make you think they live there.

Learn from my story

Be extra cautious and learn from my foolish errors. I knew it was sensible to view the car at the address shown on the V5 form but somehow got convinced to go to a location a few streets away because the vendor gave a very plausible explanation whilst en-route to his address. He said he had to quickly visit his girlfriend’s place to collect his daughter to take her to a dance class. It was more convenient to therefore view the car at his girlfriend’s. His demeanor suggested nothing suspicious. He was friendly, a young family man, it all appeared ok. The address the car was registered at was apparently his parents; it was only a couple of streets away so it didn’t seem a problem. On arriving, slight suspicion was aroused when we saw the car was parked in an area belonging to a block of flats, and the vendor was accompanied with a young male friend. The car was in general good order, well priced, nothing much appeared to cause concern except for being rushed along because he had to depart with his daughter. Shortly after the test drive and agreeing a discounted purchase price, he politely made his departure, leaving his young friend to take the cash. I only realised later how daft I’d been to neglect so many of the normal due diligence procedures, simply because I was desperate to buy a car. We had already driven over 30 miles for this viewing and I didn’t want to inconvenience my family further with other car viewings. The other factor affecting my judgement was the bargain price being offered. Good sense and logic had left me for that moment. None of this would really have mattered if it were not for the fact of taking one action. An essential point I had little knowledge of but a fundamental one when it comes to buying a second hand car privately- an online car history check. It only occurred to us during a half way meal stop en-route home. We were discussing the sale, and began questioning how the vendor, a young lad in his 20’s, had originally been able to buy a car that was only two years old. It was a light bulb moment – maybe he had taken a loan and maybe there was still finance against it. Suddenly the memory of hearing stories of cars with outstanding finance came flooding in to my conscience. I had little to no knowledge of what an online history check was, but that was all about to change. In the eyes of the law ignorance is no defence.  I was starting to feel very stupid indeed, and very concerned. My story is an example of how easy it can be to not follow your own rules when you feel under pressure to act quickly. Arriving home our suspicions were confirmed. Completion of the HPI check revealed finance was outstanding on the car. I sensed the worst and knew I was in for a stressful period ahead. It let to an extremely anxious few weeks. I had to provide as much evidence available to me to the financing company, alongside many follow up phone calls. It could have been worse, at least the vendor was receptive to my phone call to him. He gave assurances he would sort it out. After nearly two months of anxiety finally I got the confirmation I wanted. The financing company were satisfied I had proven my legal title over the car. They had removed their interest on the vehicle. Phew – I was lucky – it doesn’t always end up like that. I could have easily had the car taken from me by the finance company, and lost everything – not a pleasant thought. I can’t tell you the relief I felt when I received this confirmation from the financing company. A lesson most definitely learnt. This experience and my research that followed made me realise this kind of situation should never happen. Clearly there needs to be a change in the way second hand cars with finance are bought and sold. It is crazy for any buyer to be able to get caught up in this kind of fraud, whether conducted purposely or by ignorance by the vendor. A proposed solution, for example, could be for the V5C document to be held by the financing company until the debt is fully repaid.  This way the “owner” of the car would not be able to sell it. In the meantime, until such change is enacted, it is a case of “buyer beware”. Self-education is paramount. Follow the guidelines in this article and it will help you. What my story should highlight is that being conned, scammed, duped, or however you like to describe it can happen all too easily, even if you consider yourself astute to the kind of malpractices that fraudsters commit. It’s always good if you can learn from other’s mistakes and to do what is necessary to protect yourself from becoming the next potential victim.

Verify proof of ownership

Before you do anything else ask to view the car’s paperwork. The car should come with various documents holding vital information on its maintenance history and previous owners. If the seller can’t show you all of the documents below, walk away. Make sure you check the documents are all genuine. The V5C registration certificate (logbook) tells you the basics about the car’s history such as who it is currently registered to and how many owners it has had. It is important to be aware that the V5C registration certificate only shows the registered keeper of the vehicle. It does not necessarily mean as you might initially think that the vendor is the legal owner to sell it. If the vendor has finance against the vehicle, the legal owner is still the finance or leasing company- unfortunately there is normally nothing on the V5C document to make you aware of that. As I’ve already stated I think this is something the DVLA need to review. An online history check will confirm whether the vendor has proper title over the car and/or finance exists over it. More about this later.

Check the car’s VIN

A car’s identity has nothing to do with its registration number, which is something that could change several times during its life and is ridiculously easy to alter.  Criminals can for example easily fit a set of false number plates to a stolen car; it’s an easy way to snare the unwary. What you need to look for is the car’s VIN, or Vehicle Identification Number. This is a unique seventeen-digit number that individually identifies your car and distinguishes it from every other car in the world. As a result, it’s an important number to check whenever you’re buying a secondhand car. It can be found on the top of the dashboard and seen through the windscreen. It is also stamped into the car’s body, often on the sill and under the bonnet, and under the carpet on the driver’s side.  You’ll need to check they all match and are the same as the one recorded on the car’s V5 registration document. If they all match you shouldn’t have a problem, but to be completely safe, you’ll need to run an online car history check.

Check the Service History Booklet

Ask to see the car’s service history booklet to make sure the mileage recorded in it tallies with what you’re seeing on the dashboard. If the mileage varies, for any reason, you should be looking for some cast-iron reassurances before agreeing to buy it. You want to see lots of stamps in the book and the relevant invoices filed neatly away in a folder. Obsessive owners make great people to buy from!

Verify it’s not Cloned

A cloned car is when a car has adopted another car’s identity and is the automotive equivalent of identity fraud. At its most simple, it involves fitting the registration number from one car to another.  Although owners are legally obliged to present a car’s V5 registration document and proof of their identity before they can buy new number plates, there are ways criminals manage to circumvent this. Analysing the number plate can therefore be a useful pointer to spotting a cloned one. If the number plates don’t have the supplying dealer’s name at the bottom of them you need to find out why. Often there is a legitimate reason for a new number plate, but you need to be absolutely sure it’s a valid one. Take a look at the heads of the screws holding the number plate onto the car (assuming it hasn’t been stuck on). Are they scratched or chewed up? If so, why have they been removed? More sophisticated techniques involve the replacement or forging of V5s and cloning VIN (vehicle identification number) plates. It is estimated there might be in excess of 10,000 cloned cars on the United Kingdom’s roads. Very scary! How can you avoid it? To help protect against buying a cloned car, carry out an online car data history check. Make sure all of its details are correct, including colour, engine size and date of first registration. Also look for signs for any tampering with the number plates, V5 registration document, service history and VIN. If you’re at all doubtful, walk away, and if you think the seller is bogus it is best to contact the police to prevent a less vigilant buyer than you being scammed.

Check it’s not a Cut ‘n’ Shut

Cut ’n’ shut cars are created to hide the identity of damaged cars that shouldn’t be on the road. Look for signs of poor panel gaps and badly aligned panels, different shades of paint and cars being sold for much less than they should. Many cut ’n’ shut cars are insurance write-offs that should not be on the road. Take a look at this website from Honest John to educate yourself to some popular scams to avoid.

Look at the tyres

Tyres are also a great indicator as to how a car has been looked after. If all four match and have good tread left on them the chances are the owner hasn’t skimped on its general maintenance.

Other simple checks

Check the oil on the dipstick. Is it up to the ‘full’ level and clean? Ditto the coolant, windscreen washer, brake and power steering fluid. Careful owners will keep these topped up, while careless owners, from whom you don’t want to buy a car, won’t. The same holds true of the paintwork and interior. You want it to look cared for and loved. If it isn’t, how likely is it that the owner has looked after the hidden bits? Summary of key checks:

• Tyres
• Service history and MOT
• Bodywork dents or chips
• Cam belt history and next change required

It’s vital to take your time to look around when inspecting any car, and never feel pressured to buy the first one that looks suitable.

The test drive

Taking the car for a test drive is essential before making any offer. Detailed advice on taking a test drive has been published by the AA here. This AA page also covers inspecting documentation and viewing the car. There are two options if during the inspection and test drive you discover any problems. You can use them to negotiate a reduced purchase price, or you can simply walk away from the sale. Take your time to make the right decision. If you have any doubts at all move on to the next car.

If the inspection and test drive has gone as planned, if you are still happy to proceed it’s time to haggle and agree a price. Don’t be afraid to negotiate hard, this is where you can save a fortune. Keep it light-hearted and friendly – start low and let the seller work the price up. Stay calm and only pay up to what you have budgeted for. The benefit of having your finance in place reinforces your strong position to negotiate on the price. Remember you can always walk away if you feel uncomfortable or pressured to make the deal.

Get an online history check first

Once a price has been agreed and before any money is exchanged it’s imperative you conduct an online history check. My story earlier and the other advice included in this article should already have convinced you of the necessity of this. The online check will give you an almost certain guarantee that the car you are about to buy has never been stolen, written off, or has outstanding finance recorded against it. It will cost up to £20 but is well worth the investment. You will have peace of mind that the car is legitimate. You can get your online history check by using this link here. Refer to this government webpage for categorising any write-offs that might get flagged on your online history check.

Paying for the car

The price has been agreed and the car has passed the online history check. You now have the confidence to complete the final part – to conduct the transaction. If you plan to pay with cash here are some important considerations:

• If anything goes wrong later the transaction is not easily traceable like using electronic methods
• You might not feel comfortable or safe carrying cash, especially if it’s a high value car

Alternatively you could pay by electronic means. Here is a list of some important points to consider:

• A bank transfer is an easy method to send a large sum of money quickly; if you transfer it directly into their bank account, it often appears within the hour enabling you to take the car away the same day. Be aware though, your bank will have an upper limit on the amount you can transfer directly to someone else’s account so it’s best to check beforehand
• A bank CHAPS payment will incur a charge so check first
• A private seller may not be willing to share with you their bank account details

Never be tempted to transfer the money into an escrow account, where a third-party holds the money as a deposit to reserve the car for you. Most of these are scams. The majority of scams can be easily spotted and avoided using the techniques I’ve discussed. Use them and you’ll be clued up ahead of 95% of car buyers.

Transfer of registered keeper

Now the transaction is complete you must immediately record the transfer of the registered keeper by completing the relevant parts of the V5C document. Never buy a car without the log book. Make sure you get the original (not a photocopy) of:

• the log book (the V5C registration certificate)
• the valid MOT test document

The vendor completes and sends the V5C to the DVLA.This is done by completing the new keeper details (section 6) and signing section 8. They must give you the ‘new keeper supplement’ from the original V5C, but you’ll receive a new one in your name in two to four weeks. As the buyer, you keep the V5C2 ‘new keeper’ section of the V5 registration document. Use this DVLA webpage to guide you.

Get a receipt

The final part is to make sure you get a receipt for the transaction. It is better to take two that both you and the vendor sign and date. You can then keep one copy each. Why not prepare a template receipt before you leave home. Print two copies and take them with you on the viewing. The receipt should include:

• the make, model, engine size, registration and chassis number
• your address and the seller’s address
• the amount paid
• date and time of sale

This completes your private car buying process, but don’t forget there is one final thing – you need to tax it! The DVLA (Driver and Vehicle Licensing Agency) and police now use an electronic register to check people have paid their car tax.  When you buy a vehicle, the car tax will no longer be transferred with the vehicle, so you must tax it before you can use it.