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Downsizing your car – things to consider

“I’m downsizing my car” is a phrase that car dealers hear a lot from buyers.  People often get to a stage where they are considering a smaller car than they currently have, for a variety of reasons. 

Often it’s empty-nesters who no longer need to take the kids to school, footy practice, swimming lessons, camping holidays and so on. Other times it’s for reasons of economy – “My current car costs me too much to run” is a phrase commonly used in conjunction with downsizing.  But there are a few important things to consider when downsizing your car.

Now I’m a big fan of small cars. I like the way they are lighter, more agile and more nimble to drive than big cars. They are easier to park, usually cost less to run, tend to have less expensive tyres, brakes, and so on.

If I had a choice of two similar cars, I’d almost always take the smaller one – down to a point. There is always a point when a car is too small for your needs, and it’s important to know where that point is before you plunge into downsizing your current car for something smaller.

How small is too small?

If you are looking at downsizing your car, chances are it is because you have been upsizing your car in the past. And that makes sense – you needed a bigger car to fit little Jessica’s cello and little Johnny’s cricket bag, and now they’ve moved out of home.

But you probably also found that extra space handy when you needed to go to Ikea, or pick up supplies from the gardening centre, or travelled away with friends for the weekend. A smaller car won’t be as suitable for those sort of things, and some people find it much harder adjusting back down to a smaller car than they did getting used to a larger car.

My own parents went through this exact issue a few years ago in Australia, when they replaced their large V8 family car for a smaller, more economical four-cylinder hatch. Their regular interstate road trips with friends didn’t work very well, as it was a real squeeze fitting five adults and their luggage into their new car.

Sure, they could have hired a larger car for the weekend, but it was a hassle they hadn’t really thought about at the time of purchase. So consider carefully what you need to fit in your new car and how much you are prepared to compromise by downsizing to something smaller.

Is downsizing your car a false economy?

Smaller cars usually cost less to run than larger cars, in terms of fuel, registration and consumables. New cars are usually cheaper to service than older cars, both in terms of the cost of each service and the regularity with which servicing is required.

But that doesn’t necessarily mean it’s a guaranteed money saver to buy a smaller car, especially if the alternative is to keep your current car. People often change their cars because they get frustrated with a spate of large bills on their current car, and this often coincides with a desire to reduce their motoring costs by buying a small car.

However, what they tend to overlook in their frustration is that they are often paying thousands upfront to change their car, in order to save hundreds on annual running costs.  If you are considering downsizing your car for economic reasons, make sure you calculate your numbers carefully.

Of course, if you are replacing your car anyway, and choosing between a larger car and a smaller car, it is usually much more economical to go for the smaller car.

Are you sitting comfortably?

It seems that far more drivers find it difficult to adjust when going from a large car to a small car than vice versa, which is the opposite of what people tend to think.  Instinct suggests that if you can handle a big car around the shopping centre car park, then a small car will make your life much easier. But downsizing drivers often find smaller cars to be less comfortable to drive than their larger car.

In the same way that a large ship will cope with waves much better than a little dinghy, a larger car will generally absorb bumps and broken road surfaces better than a small car will. A smaller car will be more agile in handling and manoeuvrability, but that will also make it feel more nervous and less stable on a motorway, and more susceptible to crosswinds.

Smaller cars also tend to downsize other aspects of the car that you might not have considered, like the width of the seat or the range of adjustment of the steering wheel. It’s really important to have a decent test drive and take your time finding a comfortable seating position before you commit to buying a smaller car.

Are you downsizing performance as well as size?

When drivers are downsizing their car for economy reasons, it usually follows that they start looking closely at fuel economy figures, and choosing engines which give the best reported economy without considering any performance implications.

The most economical engines on official reports tend to be the lowest performance engines as well, and glossy car brochures tend not to mention that they often make for incredibly slow cars which struggle to keep up with the cut and thrust of normal traffic, let alone motorway driving with four people on board.

And if you are having to work your engine harder just to keep up with traffic, you will be using far more fuel than the official figures suggest.  In fact, you may be using more fuel than a larger car (or larger-engined car) which is coping with the same traffic much more easily.

Several years ago years ago, the Top Gear TV show highlighted an extreme example of this by putting a super-efficient Toyota Prius hybrid car up against a very powerful – and officially very uneconomical – BMW M3 V8 sports saloon. The hybrid was driven flat-out for a given distance, with the V8 sports car following along behind at the same speed.  Because the sports car was coping with the pace much more easily than the hybrid, it actually used less fuel.

It was a somewhat silly comparison, but did highlight the fact that hard driving kills fuel economy – so a ‘65mpg’ Prius hybrid actually recorded 17mpg when driven flat-out while the ‘23mpg’ BMW M3 sports car recorded 19mpg travelling at the same pace.

As with any car purchase, it is really important to carefully consider the implications of downsizing from a larger car to a smaller one.  Because you might be getting less than you bargained for.

Alloy wheels – the wheel deal

Why do some drivers spend thousands of pounds on alloy wheels for their cars?  Is it all about looks, or is there a technical reason behind it?  And how do different size wheels affect the way your car drives?

The wheels on your car have a tough job.  As well as transferring power from the engine to the road and steering you in the direction you’d like to go (in conjunction with the four tyres wrapped around them), the wheels have to maintain their perfectly round shape to deliver you a smooth ride, despite being bounced over speed humps, through potholes and crunched up against kerbs during poorly-judged parking manoeuvres.

On many cars, especially high-performance models, alloy wheels may also aid cooling to the brakes to make sure the car stops safely under hard driving.  So how do different wheels affect the way your car drives?

Alloy wheels are replacing steel wheels across the industry

Lower-priced new cars, and many older cars, will come standard with wheels made from steel.  Steel is the metal of choice for most parts of a car, as it is cheap and can be made into different shapes quite easily, so it has always been an obvious choice to use for wheels.  But more and more cars are now equipped with wheels made from aluminium alloys, which are stronger and lighter than steel.

An alloy wheel will be much lighter than a steel wheel of the same size, which improves the car’s ride and handling as there is less weight bouncing around for the suspension to cope with and less weight for you to steer when you turn the wheel.

An alloy wheel is also stronger than a steel wheel, which means it will flex less around corners, helping the car to handle better.  However, a very big shock (such as hitting a pothole) is more likely to crack or shatter an alloy wheel, whereas a steel wheel will flex and absorb some of the impact, making it less likely to break.

Alloy wheels also tend to be stylised and polished, whereas steel wheels would rust unless treated and painted, and are usually covered with a decorative plastic trim (you know, the kind you inevitably see lying by the side of the road after they get knocked off), so a set of alloy wheels usually enhances the look of a car.

You should also read: Caring for your alloy wheels

Alloy wheels – is bigger always better?

Most cars will give you the option of paying more money to have larger alloy wheels fitted.  On the car, however, the total rolling height of the wheel and tyre must remain the same, so a larger wheel means a lower profile (thinner) tyre.  In the photo to the left we have a 15-inch wheel (left), a 16-inch wheel (centre) and a 17-inch wheel (right), all mounted in tyres to fit the same car.  If you look at the three wheels, you will see that the overall height of each wheel/tyre unit is the same, but the 17-inch wheel has a much ‘thinner’ tyre than the 15-inch wheel.

Being constructed from rubber, the tyre flexes and absorbs a lot of the small impact of bumps in the road, effectively forming part of the car’s suspension. A lower profile tyre has less rubber in the sidewall to flex and soak up the bumps, so a larger wheel/thinner tyre combination will give you a firmer ride, making the car feel noticeably bumpier.  However, less flex and wobble will mean improved handling as the car changes direction through a corner or under braking.

But the real, and simple, reason that most people pay lots of money for bigger wheels is for the looks – although don’t expect expensive alloy wheels to add much to the car’s resale value down the track.  I used to have an Audi A5 with 20-inch alloy wheels (standard was 17-inch).  The large wheels meant the tyres were extremely low profile, so hitting a pothole or going over a speed hump was – literally – a painful experience, and sometimes it felt like the car had no suspension at all.  But it looked fantastic…

Recommended reading:

Do big alloy wheels crack more easily?  The Car Expert answers a reader’s question about the fragility of big alloys.
Which optional extras are worth paying for?  It’s easy to rack up thousands of pounds in options on a new car, but which are actually worth it?

Depreciation – Why do new cars lose so much money?

It’s an age-old complaint of car buyers around the world – as soon as you drive your shiny new car off the forecourt, it loses a quarter of its value.  Anyone who has tried to sell their new car back to the dealership can certainly vouch for this rather rapid depreciation in their car’s worth.  So why is this the case?

Let’s have a look at where all that money disappears to.  As an example, let’s look at a new car costing £20,000 on the road (including all taxes and charges) as its recommended retail price.

Road tax on your car for its first 12 months is probably going to be somewhere around £150 (it can be anywhere between £0 and £1,000, depending on the car’s CO2 emissions), and the DVLA will also slug you a further £55 administration fee for no good reason other than because they can.  So that’s about £200.

VAT – the government’s contribution towards depreciation

VAT is the big one – and on a £20,000 car (minus the registration charges) it’s going to come in at about £4,000. That goes straight to HM Revenue and Customs.  So a £20,000 new car is really just under £16,000 + tax.

The dealership has its costs of sales – what it costs them to run the business – which it has to factor into every car it sells.  That means paying staff (the sales executive, business manager and sales manager will all get a commission on each car, plus there are wages for admin staff, technicians, cleaners and valets), running a fleet of demonstrators, maintaining the showroom, advertising costs and so on.  It varies across different dealers, brand and locations, but you’d be looking at £1,000 to £2,000 per car.

In addition to covering its costs, the dealership will want to make a profit on every car it sells.  The exact amount will again vary, but it’s fair to guess it could be another £1,000 to £2,000 (although in today’s climate, it could well be a lot less).

So you as the customer might be paying £20,000 for the car, but the dealership may have bought that car for as little as £12,000.  And if that’s what they are paying for a brand new car, how much do you think they are going to pay for your used car (even if it is virtually new)?

Well, there’s no VAT to worry about on a used car (except in certain cases, such as dealer demonstrators), but on the other hand, the manufacturer would rather the dealers sell new cars rather than used cars, so there are sales targets and financial implications relating to how well they perform against those targets.  Plus a customer who can buy a brand new car for £20,000 is unlikely to pay a similar amount for a used car – regardless of why it’s used.

So what was a £20,000 brand new car would probably be offered for sale at £16-17,000 if it was used but ‘as new’.  Take out the dealer’s costs and profit, and you’re probably back to about £12,000 again in terms of what they would buy it from you for.

Depreciation averages out over time

While people bemoan the instant depreciation on their new car, is it really a great problem for car buyers?  If you are going to keep your car for the average 3+ years, then there’s really no need to get too concerned about it.

Over that sort of timeframe, the cost difference between buying new and used diminishes greatly.  Also keep in mind that when you buy a used car, you might not have to worry about VAT, but you will still have to factor in the dealership’s cost of sales and profits – and the costs to prepare a used car for sale may well be a lot higher than for a new car.

The best advice is to remember that cars always cost more than you think when you want to buy one, and are worth less than you think when you want to sell one!

How to sell your car for cash

Do you want to sell your car privately? Are you worried about accepting thousands of pounds in cash from a complete stranger? You should be. Here’s why, and how to get around it.

Money laundering and counterfeiting are real problems for the authorities, and efforts have been made over the last few years to crack down on these crimes. The car industry has been targeted for much of this illegal activity because cars are easily obtainable and highly mobile, meaning a criminal can pay for a car in dirty cash and literally have it out of the country before the cash is checked by a bank.

Car dealers often refuse to take cash at all

These days, most reputable car dealers will not accept more than a couple of thousand pounds in cash, and some won’t handle it at all on the sale of a car. Instead, they will insist on an electronic transaction via debit/credit card or bank transfer (well, after they have done their best to sell you their car finance offering). This protects their interests and makes the bank responsible for the legitimacy of the account in question.

As a result, counterfeiters and money launderers have been turning to private sellers to get rid of their ill-gotten or counterfeit cash. Once you sell your car, and have handed over the keys to somebody you can probably kiss goodbye to any chance of reclaiming your loss if the cash turns out to be fake.

So how do you deal with a buyer paying cash when you sell your car? You could ask them to transfer the funds into your account, but then you don’t really want to be giving strangers your bank details any more than you want to be taking their cash.

A bank cheque has traditionally been one option, but they can still be counterfeited (and would you actually be able to tell?), so that’s not much of an improvement.

The other nightmare scenario for sellers is that if you have taken a large amount of cash from a buyer, you then have at least one person who knows where you live/work and that you have a lot of cash on the premises right now.  This is especially difficult if the transaction has taken place out of banking hours, so you can’t get to the bank until the next working day.

The best precaution to take when you sell your car

The best way to sell your car for cash is to arrange for the buyer to meet you during normal business hours and go with you to your bank. The bank will check the cash and count it on the spot, and it is immediately deposited into your account. You can then happily hand over the keys and wave goodbye without any stress, or the potential horror of turning up to the bank afterwards to find the money is no good and your car is long gone.

If the buyer has come to view the car out of business hours, you can ask for a small deposit and then have the balance paid as described above the next day.

If a buyer is not prepared to go along with this simple process (often making excuses that it is not convenient to meet during business hours), it is a warning sign and you should simply walk away from the deal with your car. If a dealership won’t risk accepting large cash payments, why should you?

Can you give car dealers cash? Buying a car with cash is harder than you might think.