Buy a bargain new car online

Millions of drivers are set to upgrade their vehicles this month as March brings new registration plates and the end of the car scrappage scheme. Yet you don't have to head to the showroom - buy online and you could save thousands of pounds and enjoy greater protection. Find out more

The Government’s car scrappage scheme - which offers drivers a £2,000 discount on a new motor if they trade in a model more than 10 years old - has fuelled (forgive the pun) a surge in new car sales. Figures for February show that UK sales rose 26% year-on-year - and sales are expected to remain high before the end of the Government scheme in March and the launch of new ’10 plate’ models.  

Yet there may be better ways to cut the cost of your new car - research from What Car? magazine found that many manufacturers have hiked the list price of new vehicles by more than a third to maintain their margins. The scrappage scheme sees manufacturers stump up half of the £2,000 discount - and it seems they’ve used it as a smokescreen to actually increase their prices.

What Car? found that showroom prices have risen by an average of 9% over the past year, with auto giant Ford amongst the worst culprits. Ford hit buyers of its Fiesta 1.25 60 Studio with a 'staggering hike' of 32.6% - up by £2,414 to £11,536 and it has two other models in the league table of the five biggest price rises.

Yet there is one way to beat the price hikes. Canny motorists have been tempted into buying online by sites offering discounts as high as £5,000 of the price of a new vehicle. In a recent price test of 14 popular models Which? Car found that five offered by online brokers at more than £5,000 below their list price - and six other models were more than £1,000 cheaper.

The leading brokers - and how they work  

The three major players in the market are Drive the Deal, Broadspeed and Motorpoint. All three firms have been in operation for 10 years and are all subject to UK consumer protection laws. The brokers keep their prices low through buying in bulk from dealers and passing on the discounts they achieve direct to consumers. The one thing to consider, however, is that the biggest discounts are on unpopular models that dealers find hard to shift.

The sites should be seen as a ‘middleman’ that does all the leg-work for you - most operate by displaying their discount prices then passing on your details to a UK dealer in return for a commission. The dealer then telephones you and discusses the sale direct - which means that the car you buy is supplied with a full UK warranty and comes from a licensed showroom.

With regard to test drives and part-exchanges, the opportunities vary across different sites. Most online car brokers can arrange a test drive for you but it may be simpler to book one at your local dealer. Part-exchanges are less easy to do online, not least due to the logistics of handing your motor over - Drive the Deal recommends that you sell your old car privately.  

Finance and protection

Typically you’ll be expected to put down a small deposit when you find a model - usually around £500 - before paying the balance on delivery. Most of the time, all transactions will be done through the dealer and not the websites - Drive the Deal and Broadspeed both let you talk with UK dealers direct throughout the buying process. 

Related goal

Buy a car for less

A car is a significant purchase. Take your time and ensure that you get the best possible deal.

Do this goal

And because you’re dealing with brokers, you’re free to raise the purchase funds as you see fit. As always, it’s worth avoiding costly forecourt finance schemes and trying to pay as much as you can up-front. To make up the difference, it could be worth applying for an interest-free credit card for purchases. The current best-buy for purchases is the Tesco Clubcard credit card at 0% for 12 months. If you decide to take the broker’s finance, check the rate is competitive with personal loan rates.  

If you need to fund the whole purchase with credit, it could be worth looking at a personal loan - particularly as rates are cheaper for larger sums - but bear in mind that loan rates are currently at a nine-year high. The typical best buy rate for a £10,000 loan is 7.6% - but it’s only available to existing Nationwide Building Society customers. If you’re not an existing Nationwide customer, both Sainsbury’s Finance and Alliance & Leicester are currently advertising a typical rate of 7.9% APR. You will, of course, need a healthy credit rating to bag a deal at that rate.

When it comes to your legal rights, you enjoy the same statutory protection as you would buying direct, because you’re dealing directly with the showroom. Using a credit card – even for a £1 deposit on a car worth priced at over £100 - offers you further protection under Section 75 legislation. Meanwhile, buying online gives you the benefit of distance-selling protection - which gives you a seven-day ‘cooling off’ period to return the car if you’re not happy with your purchase.   

What you can save

Britain’s most popular car is the Ford Fiesta, according to sales figures from Society of Motor Manufacturers and Traders. The list price for a 1.25 60 Studio 3 three-door model is £11,536 but Drive the Deal offered us a price of £9,565 and Broadspeed £9,416 - a saving of nearly £2,000. And remember, you can save even more on less popular models.

For even more savings, read our article Drive a Brand New Car for Less or head to our Goals section for step-by-step help to Buy a Car for Less. 

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