Used car market takes downturn

Figures show that the used car market is down by 8%

The value of second hand cars is falling, according to new research.

The credit crunch, rising fuel prices and new road tax rules have all contributed to a £2bn slump in the used car business this year.

Uncertainty about mortgages has meant that fewer people are willing to commit to long-term car finance plans.

Research by Sainsbury's Finance found Scotland has the lowest percentage of people planning to buy a used car with the East Midlands being highest.

Changes already on the way for road tax mean that some family cars with bigger engines face up to £455 a year for a new disk.

New car tax rates for 2009

Best price

Families feeling the pinch from the credit crisis are also hanging on to their old cars longer, which means the market isn't moving.

Take the example of a 2001 Vauxhall Zafira 1.8 Life with average mileage, advertised for £2300 - that's nearly £400 less than its book price in April.

Jack, 18, is trying to sell his Fiesta: "I will probably let it go for a bit a cheaper than I'm asking for it, just to get rid of the car really."

Sainsbury's Finance advises people planning to sell their cars to make sure they know the potential value to achieve the best price.

It is good news for people who are buying these cars at low cc, low tax bracket Mark Oliver

Bargains

Head of loans Steven Baillie said: "It's important that people remember to haggle when negotiating any car purchase, as haggling can save the buyer an average of £1,468."

Mark Oliver is the owner of Henley Car Sales Ltd. He said: "With all the scare with all the credit cards and everything, everyone's just quietening right down.

"Business has gone quiet. Where we were doing roughly around 20 and 25 cars a month, we're going down to like 12 and 15 cars a month."

The news does mean that those in the market for a used car could pick up a bargain.

Oliver added: "It is good news for people who are buying these cars at low cc, low tax bracket - superb. But what do you do with all the big cars?"