Drivers face paying a £26,000 “used car premium” as manufacturers warn of year-long waits for new vehicles.
Consumers have to hand over thousands more for older cars compared with buying them brand new. A combination of pent-up demand from drivers unwilling to wait for new models, and higher interest rates forcing up debt repayments, has created a huge gulf in the cost of vehicles.
The interest paid on PCP deals for used cars has risen while rates for new cars have fallen. This came after prices for used cars hit a record high on the of back huge delays for new models. This was caused by global supply chain issues and a worldwide shortage of microchips.
Large numbers of second-hand vehicles, which typically depreciate over time, have increased in price and are now more expensive than brand new equivalents. However, the sting in tail for drivers is that the average rate of interest for second-hand car finance deals has gone up while that charged on new cars has dropped.
Santander Consumer Finance now charges 7.85pc interest on a second hand car, up from 7.69pc last year. This is expected to keep on increasing as interest rates rise further. Rates for new cars have fallen to 4.3pc from 4.7pc, although buyers must wait months, or even years, for the keys.
A lightly-used modern Land Rover Defender with 10,000 miles on the clock cost around £72,000. New models sell for less than £62,000. On a three-year PCP deal with a £10,000 deposit, used models now come with a premium of almost £26,000 to a brand new model, due to the gap in interest rates and purchase prices.
Similarly, a one-year-old Dacia Sandero, Britain’s cheapest car, having done 10,000 miles, costs £12,481, according to valuers Cap HPI. Consumers would pay £312 a month on a three-year PCP deal charging 7.85pc with a £2,500 deposit. New models have a list price £10,173 but cost £228 a month on a lower 4.3pc rate. Overall the used model would cost £5,333 more.