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Don’t take undue risks on used car deals to avoid VAT

10th January 2011 Print

The New Year has brought with it the dreaded rise in VAT from 17.5% to 20%, which means those planning a major purchase – such as used car buyers – could be tempted to look for ways to avoid a bumper price tag.   However, the additional VAT could lead to some used car buyers seeking out a private seller rather than a dealer, but warns HPI, consumers still need to remain cautious to avoid unscrupulous sellers offering a banger that looks like a bargain.

“Buying privately can save used car buyers money by avoiding the VAT, however, it does come with some risks,” says Nicola Johnson, Consumer Services Manager for HPI. “One in three vehicles checked with HPI has some form of hidden history, which can end up costing hundreds, or even thousands, of pounds extra to an unsuspecting buyer. However, the VAT rise shouldn’t stop you from buying used, if you’re prepared to do some extra work before you go ahead and buy.”

Check out the market

Browse a variety of different classifieds to get a feel for the average prices of the sort of vehicle you’re interested in. There are also a number of valuations services available, and HPI include one as standard within the HPI Check, as well as offering it as a standalone purchase. Use these to get a guideline on the price you’re likely to be paying.

Be prepared to haggle

You may be able to negotiate a better deal if you’re prepared to haggle. Check the vehicle over, or get it inspected to see if any work needs doing, and use this information to improve your deal. If you’re considering buying from a dealership, they may already be offering to pay the VAT for you, or could offer extras or an extended warranty instead of a discount.

Look for other VAT impacts

Whilst you may be able to avoid the VAT issue by buying privately, you’ll still be affected by the VAT increase in the form of higher fuel costs. The HPI Check comes with information on the MPG of the vehicle, plus average annual fuel costs and the applicable rate of road tax for the vehicle. Saving money upfront won’t help make up for the long term costs of buying a vehicle which only does 10 mpg.

Know the risks

One in three used cars checked by HPI has some form of hidden history. It may be stolen, written-off, or still on finance, or may just have a private, or cherished, plate on it. Whatever its background, it’s vital to get all the facts before you purchase, so that you can make an informed decision. A mechanical inspection will indicate the physical state of the vehicle, and an HPI Check will tell you if there is more to the vehicle than meets the eye. As well as telling you if the vehicle is stolen, written off or on finance, an HPI Check will also reveal if the vehicle is at risk of being sold illegally, or has any mileage discrepancies.  

Johnson concludes, “An HPI Check is essential for used car buyers who want to find a legitimate bargain and protect themselves from fraudsters. If buying privately, buyers should always view and purchase the vehicle from the registered keeper’s address (as shown on the V5C/registration document) and avoid paying cash. If a deal seems too good to be true, it probably is. It’s easy to be taken in by a rock bottom price and shiny paintwork, so get the car history checked and, if you can afford it, the vehicle inspected to ensure that your dream purchase doesn’t turn out to be a nightmare on wheels.”