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Five ways to save money when buying a car

Which? has compiled top tips for consumers on how they can save money on buying a car

Back street outdoor car lot, vehicle sales in Westcliff on Sea, Southend, Essex, UK. Budget cars for sale. Old, ageing vehicles. Saab. Ford
Used cars have gone up in price as families struggle with the cost of living crisis. Photo: PA/Alamy (Avpics)

Used car sales grew by just over 4% in the first three months of 2023, following three consecutive quarters of falling sales, but there’s sign of high prices easing as more cars change hands.

Whether your current car is ready for the scrapheap, you need a vehicle for work, or you just fancy a new motor, here we have some top tips from Which? on how consumers can save money on buying a car.

1. Compare new and used prices

When buying a used car, you will have to compromise on your choice of specification compared with ordering a brand new model, but the savings can be worth it. However, balance that with the loss of some of the car’s warranty duration. Don’t be afraid to haggle with a car dealer. Do your homework and research prices elsewhere – start by looking at the typical prices listed in Which? car reviews, then what’s on offer from online brokers. These can offer competitive prices, but cars may not be based locally, so factor in pick-up or delivery.


Read more: Revealed: UK's best selling cars

Margins on new cars have been very small since the pandemic, and with long waiting lists – many vehicles will take more than 12 months to arrive on your driveway – dealers don’t often need to sell a car cheaply. The same goes for used cars – dealers will likely wait for the best price. Be reasonable, and you can get a decent price reduction. Brokers can also offer considerable savings on new cars.

2. Consider an ‘old’ new car or a ‘new’ old model

A pre-registered car, or ‘pre-reg’, is a car that has never been owned by an individual, but was registered by a dealer or a leasing company. Dealers often register a glut of vehicles when they are approaching the end of a month or financial quarter to meet quotas imposed by the manufacturer. Pre-registration by dealers became less popular in the peak of the pandemic due to stock shortages, but it is returning. One consideration if you are buying an ex-demo car is that they will likely have been driven by a lot of people.

By purchasing a pre-reg car, you’ll become the second owner. This might cost you when you come to sell in the future, but the savings over a box-fresh model often make it worthwhile.

When buying a new car, you might be tempted to opt for the newest model, but this isn’t going to be the cheapest. During a car’s lifecycle on sale, it will receive a mid-life update (sometimes more than one), meaning dealers will be keen to shift stocks of the older, but often near identical model. Older versions will be in stock only and won’t open for custom orders. Sometimes you can save big on a car with just minor cosmetic differences from the brand new version. Again, you might take a minor hit on the resale price in future, but the initial saving can be significant.

Just be careful if you’re buying a pre-registered model via a broker. Some unscrupulous agents target volume bonuses from carmakers, which means they can’t put you down as the registered keeper, potentially leaving you in difficulty with insurance companies – and even the police – should something go awry. Check who will be on the V5 form before committing, and walk away if it’s not in your name.

3. Consider downsizing

Do you really need an SUV? Could a hatchback or estate model be big enough? When choosing their next car, many drivers opt for something similar to their old one, but they could be spending too much on something they do not need. You can save a lot of money on running costs by choosing a vehicle that’s a little smaller and missing a 4x4 badge. For starters, fuel bills tend to be lower and smaller tyres cost less to replace – plus, SUVs often attract a price premium over a similarly sized estate car.

Don’t think you’ll be scrimping on the luxuries either, as ‘big car’ features, such as climate control, parking cameras and smartphone connectivity, are on even the smallest superminis these days. You’ll have to shop carefully to find a small or mid-size SUV that offers much improvement in interior space over a comparable hatchback or estate.

4. Ask about discounts

Being a cash buyer won’t necessarily get you a discount straight away. Express interest in buying through finance, which dealers prefer as they can earn commission from it, and ask what discounts are on offer. Then, if you can afford to, offer to pay in cash anyway. Finance might be a cheaper way to buy though.

Don’t delay, car prices remain high and this coincides with a sharp rise in interest rates. Forecasts suggest that interest rates will go up before they come back down.

5. What about electric cars?

Sales of new petrol and diesel cars are set to end in the UK by 2030 and many people have already bought, or will be considering buying, electric vehicles (EVs).

Electric cars can cost hundreds of pounds less to charge per year compared to filling the same size car with petrol or diesel – at least for those who can charge at home.

Read more: Car insurance customers paying monthly risk £300 penalty

How much it costs to charge an electric car depends on where you charge it. To put it plainly: if you have off-street parking and a home charger, you'll have access to the cheapest rates and you're likely to save a considerable amount of money compared to paying for petrol or diesel - but the cost at public charge points will vary considerably and may not always work out cheaper.

Owners of a mid or large SUV can save just over 5p per mile on fuel costs if they charge at home on a standard tariff compared to somebody running a diesel version of the same car. That saves £427 over a year (based on 8,100 miles - the average mileage from Which?’s latest car survey). This figure increases to over £1,000 per year (or 12.5p per mile) if you have an off-peak rate and can charge during off-peak hours. Be aware that charging costs increase outside of the off-peak rate.

Which? survey data found that the high upfront costs of EVs are still a barrier to people buying electric cars. However, the consumer champion found that a third (32%) of Which? members that purchased an electric vehicle outright had bought a used version, which may be a way to get some money off the upfront price.

Watch: Why Mondays are the best day of the week to go car shopping

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