Buying a used car with a £5,000 car loan

You don’t have to buy a brand new car to get a great set of wheels. In fact, since most cars depreciate in value by 20%* almost as soon as you drive them off the forecourt, and by up to 40%* in their first year on the road alone, it can often be more sensible to pick something up second-hand.

It can be hard to know where to start when looking for a used car, so we’ve put together some top tips to make sure you get a great deal, and end up with a car you love. And if you need inspiration, we’ve even included a few of our favourites to get you in the mood for car shopping.

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If you're thinking of spending £5,000 on a car, here are some things to think about when exploring your options

How much should I spend on a used car?

How much you spend is really up to you - and should depend on how much you can afford to pay up front or borrow. If you want a reliable vehicle that will last you a long time without having to spend a lot of money on maintenance, repairs or MOT, we think £5,000 is a good starting point.

You can opt for a financing plan from your dealership, or pay on a credit card. But cash is king when it comes to buying a used car, as it often means you’re able to negotiate a better deal.

If you don’t have the money to pay up front and you’re looking for a low-cost way to finance your car, we offer an attractive 4.4% APR Representative on loans between £5,000 - £7,499, with repayment terms between 12 and 60 months.

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Applying for one of our loans is easy

First of all, we’ll use basic information about your circumstances and credit history to provide you with a personalised quote, so that you know what your rate of interest will be, and how much you’ll pay back each month.

If you’re happy with your quote you can apply online, this takes just 10 minutes to complete with no paperwork to sign. All we need you to provide are your address details for the last two years, your employer’s name and address, basic details of your income and outgoings, and your contact information.

If your loan application is approved then the money will be in your bank account the next working day – so you can go car shopping immediately.

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Responsible lending

Who we lend to, are you:

  • over 18 years old
  • a UK resident (excluding Isle of Man and Channel Islands) with a minimum income of £10,000 a year;
  • with a good credit history, no previous County Court Judgments, Debt Relief Orders, Individual Voluntary Arrangements, defaults or bankruptcies;
  • with a UK bank account in your name which accepts Direct Debits.

If all of these apply this doesn’t guarantee that your application will be accepted. We will need to do some additional credit and affordability checks.

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What could £5,000 get you?

Representative Example: A £5,000 loan from Ikano Bank at 4.4% APR Representative will cost £113.60 per month over 4 years - so you’ll only repay £5,452.80 in total so your cost of credit is £452.80.

But what will you get for your money? To give you a bit of inspiration, we've put together our pick of used cars on the market for around £5,000.

City Cars

Small, light and often a cheaper option, these cars are perfect for whizzing around and nipping into parking spaces. Great for new drivers or those who only make short trips.

FIAT 500

Fiat 500

We found:  A 2009 reg with a 1.2L petrol engine and 24,518 miles on the clock for £4,500

VW Polo

VW Polo

We found:  A 2009 reg with a 1.2L petrol engine and 29,000 miles on the clock for £4,950

Mini Cooper

Mini Cooper

We found:  A 2010 reg with a 1.6L diesel engine and 20,000 miles on the clock for £5,500

Family Cars

Roomier than a city car, usually with at least 5 seats and 4 doors, these more powerful models will get you through the school run, shopping trips and long motorway journeys.

VW Passat Estate

VW Passat

We found:  A 2008 reg, with a 2.0L diesel engine, and 30,000 miles on the clock for £4,500

Peugeot 508

Peugeot 508

We found:  A 2011 reg, with a 2.0L diesel engine, and 34,000 miles on the clock for £5,995

Citroen C3 PICASSO

Citroen C3 Picasso

A 2010 reg, with a 1.4L diesel engine, and 16,000 miles on the clock for £4,500

Luxury Cars

Think a luxury car will break the bank? Think again. They might have a few miles on the clock, and perhaps they won't always be completely practical, but when they look this good, who cares?

Porsche Boxster

Porsche Boxster

We found:  A 2001 reg, with a 2.7L petrol engine, and 76,000 miles on the clock for £4,450

Jaguar XJ

Jaguar XJ

We found:  A 2005 reg, with a 3.0L petrol engine, and 105,000 miles on the clock for £4,990

Mercedes Benz S Class

Mercedes S-Class

A 2005 reg, with a 3.2L diesel engine, and 88,000 miles on the clock for £5,295

(All prices found via AutoTrader, and were correct at the time of writing – March 2017)

If our top picks have you ready to go car shopping, we’re here to help. Find out how much your monthly payments would be with a personalised quote.

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Grey car icon

Did you know that where you live could affect how much you pay for a used car? A recent survey by CarGurus found that the best deals are found in Liverpool, Leeds and Manchester, while Belfast, Cardiff and Plymouth pay more. So it could be worth going a few miles down the road for a better price!

Source: www.am-online.com

How to buy a used car

Buying a used car can be a minefield, and there’s work to do before you even head down to a dealership or start looking at ads online. If you don’t know what you’re looking for or how much you can afford to spend, it can be easy to end up with the wrong car - an expensive mistake we’d all rather avoid! So we’ve compiled a list of tips, to ensure your used-car shopping experience runs smoothly.

  • Work out what kind of car you need

    First of all, think about your needs in the following categories:

    Ikano car loan icon

    Size: Is a people carrier essential for your large family, or can you get by with a two-seater? Do you need an estate to carry work supplies, or will a hatchback do?

    Efficiency: How much time do you spend zipping up and down the motorway? If you make long trips often you might be better off with a diesel engine - but if you’ll mainly be using the car for short, city trips, a smaller petrol engine will be more suitable.

    Running costs: It’s important to factor in how much you want to spend on fuel consumption, insurance, road tax, service and MOT fees as this will probably inform the type of car you choose. It’s no use buying a new car if you can’t afford to run it!

  • Do your research

    Car loan gear stick

    If you’re about to spend £5,000 or more on a used car, it’s important to make sure you’re not buying a dud! Firstly, make sure you do a full visual inspection of the vehicle in daylight and with good visibility –  you want to make sure you can see any faults.

    Check the bodywork for any cosmetic damage, rust and uneven gaps between panels (which could indicate a shoddy repair job). Look at the engine and electrics, too, and make sure there aren’t any oil or water leaks. If this isn’t your forte, take a friend or family member who knows what they’re doing – or if you’d prefer, you can pay for a professional once-over.

    If you’re happy with the condition of the car, take it out for a test drive. You should use this as an opportunity to ensure it brakes and accelerates correctly, and that the clutch and gearbox are in full working order. Listen out for any odd noises while you’re driving, as these could be a sign of a mechanical problem.

    If you’re happy with how it looks and how it runs, you might think it’s time to hand over the money - but don’t part with your cash just yet! Use the DVLA website to check the car’s identity and make sure it hasn’t been written off or stolen, and check if it’s really worth the asking price by comparing it to similar models available online.

  • Make sure you know how much you can afford to spend

    Ikano Bank car loan gauge

    If you don’t go in with a firm budget in mind, you may end up spending far more than you wanted to. Use our loan calculator to work out how much you can realistically afford to borrow. If you have any cash or savings you could put towards the car, factor this into your budget too – to come up with a hard limit for the amount you’re willing to spend.

    Remember, there’ll always be a slightly nicer car that’s just out of budget, but if you might struggle to afford the repayments, it’s not worth taking the risk.

  • Haggle

    Car loan paying for your car

    Once you’re sure you want the car, it’s time to negotiate a price. And if you’ve got the advantage of being a cash buyer, you could be in a great position to bag a bargain. It may feel embarrassing or uncomfortable to haggle, but remember that no seller really expects to receive the full asking price.

    Think carefully about your budget, the car’s condition, and how much it’ll cost to run. Offer an amount slightly lower than you’d be willing to pay, so there’s room for you and the seller to meet in the middle. But be prepared to walk away if you’re feeling pressured to pay too much – there’ll be a better car for you elsewhere.

If you need a bit of help paying for your car, don’t forget that one of our low-cost loans could help. We offer a 4.4% APR Representative on amounts from £5,000 to £7,499 and you can pay over 12 to 60 months.

We’ll provide you with a personalised quote in seconds, so you know exactly what your monthly repayments would be, and how much interest you’ll pay in total if your application is accepted. And once you’re ready to apply, our online application form takes just 10 minutes to complete. If your loan application is approved then the money will be in your account the next working day.

 

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*Sources: www.thecarexpert.co.uk and www.theaa.com