So you’ve decided to buy a new car, but with so much choice it’s hard to know where to start. Cars can be expensive, so it’s important to make sure you get the most for your money. You might be surprised to read that, in the long run, buying newer cars can actually work out to be a lot cheaper than buying older ones.

On the surface the mathematics seems simple – £6000 for a 9 year old car is cheaper than £16000 for a new one. Sure, you’re sacrificing some of the perks that go along with having a new car, but nothing that amounts to the £10000 you’ll be saving – right? Well, not necessarily.  The truth is that there are plenty of costs associated with owning and maintaining a car that are often overlooked, and with lots of clever finance agreements that could put a newer car within reach, you could discover that owning a more recent model could in fact be the cheaper option!

Have we captured your attention?

As mentioned above, it can be hard to justify the extra £10k spend on the new car, so we’ve gone into a bit more detail about the various costs of owning and running a car that should be carefully considered.

Costs to run a car

First things first, let’s take a look at some of the main costs associated with owning and running a car, which are;


  • Purchase cost or finance payments
    • The price of the car and the finance payments (if you choose to pay by this method) are the biggest costs associated with purchasing a car. Though car prices are obviously higher the younger the car, there are finance agreements, such as PCP (personal contract purchases) that can significantly reduce the monthly cost of purchasing newer cars.
  • Insurance
    • All cars are assigned an insurance group based on a number of factors such as power, value of the car, car security and more. With the cost of motoring rising, many car manufacturers are making efforts to improve on these areas so that the car’s insurance group is lower.
  • RFL (Road Fund License, better known as Road Tax)
    • RFL is based on engine size, fuel type and emissions, meaning that efficient, economic cars tend to pay considerably less. Since all new cars are obliged to meet stringent emissions targets, on the whole the RFL for them is lower compared to older models.
  • Fuel
    • Fuel tends to be pretty expensive, so ensuring that you plenty of miles to the gallon is important as it can save hundreds of pounds over the course of a year. As a result of the manufacturer’s effort to produce more eco-friendly cars, the trend is that new cars tend to have increasingly efficient engines.
  • Services
    • Car services can vary in cost, depending on the amount of work required. Inevitably, older cars will require more work thus increasing the price of the service.
  • Repairs
    • Sometimes things go wrong and your car will need a repair that wasn’t addressed in a service. With age, the frequency and severity of repairs inevitably increases.


Evidently, new cars are, on the whole, considerably cheaper to run on a day-to-day basis – but that doesn’t change the fact that their retail price is so significantly higher.

Saving money with a clever car finance policy

So now that we’ve explained the running costs, it’s time to take a look at how a clever car finance agreement can mean that even someone with bad credit can afford a newer car.

With a straightforward finance agreement such as a hire purchase, the customer agrees to make monthly payments over an agreed term length (for example, 2 years) after which they have fully paid off the retail price. Whilst this can be a good option for lower value cars, the monthly repayments for higher value cars can be expensive.

However, there are other types of car finance agreements that mean people who couldn’t afford a new car before can now manage it. Specifically, a PCP agreement (personal contract purchase) means that the customer makes monthly payments over the term which amount to the depreciation cost (the amount a monetary value a car loses over the term.) When the contract term is up the customer has the choice to either buy the car outright by paying a final sum towards the value of the car, give the car back, or part-exchange it for a new car.

PCP contracts are generally only available to those with a good credit score. If you have a bad credit score, we may still be able to help and would urge you to ring our advisors, who can help you find the right finance deal for you.

Case Study

To demonstrate how affordable a new car can be compared to an older one, we took three Ford Focuses of different ages and compared their average annual costs to some surprising results.

Ford Focus TDCi 2.01l 2006 Ford Focus Econetic 1.6l 2009 Ford Focus EcoBoost 1.0l 2013
Mileage 70,000 24,000 0
MPG 48 56.8 67.3
RFL £90.00 £30.00 £0
Insurance Group 19E 7/15E 11E
Service Interval 12,500 12,500 12,500
Average Annual Cost £850.00 £500.00 £125.00
Finance Payments £165 p/m for 2 years £215 p/m £260 p/m for 2 years on PCP

*All figures have been obtained from a 3rd party and are estimates. As a rule, we tend to find that whilst these figures are constant for smaller cars, when it comes to larger cars it is not always the case – so we stress the importance of carefully comparing prices before making any vehicle purchase. Overall, whilst you should never rule out buying an older car, it is evident that newer cars are not only affordable with a good finance agreement, but can even be cheaper once running costs are taken into consideration. We recommend you spend time before choosing and buying a car researching various options – you might be surprised by what works out cheapest! Our customer advisors are here to help you make the best decision when deciding whether to buy a newer or older car, and can help you find a great finance deal to bring your perfect car within reach. We provide a range of finance options for all credit types – click on the Apply Now button to see if we can help you find your perfect car at the best price! Apply-Now We found this study old vs. new cars really interesting, and have decided to work with our customer advisors in the coming months to bring you more comparisons of old vs new car models in the coming months. If there are any terms in this article that you are unsure of, please comment below – we are keen to help you make sense of car finance, so your feedback is always appreciated. Till then, we wish you luck in your search for your new car!

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