Expat’s guide to buying a car in the UK

Buying a car is probably one of the first things you’ll do on your return to the UK. Although the UK has some great public transport links, nothing beats having your own set of wheels. You can also use it to explore and get to know these wonderful isles once more.

One of the great things about buying a car in the UK is that you have options – new or used; hire purchase or personal contract hire; electric or fossil fuel, the choice is yours. Whatever type of motor you choose, we can help you protect it with specialist expat car insurance.

bas-peperzak-tyhpK_QelPo-unsplash.jpg

Validating your driving licence


If you passed your driving test in the UK, prior to leaving the country, you don’t have to give any thought to validating your licence – you’re good to go. However, if you passed your driving test while you were aboard, you’ll need to double-check how long it will be valid for in the UK.

The good news is that you can drive in the UK on any country's licence for a period of up to 12 months. After that, it will depend on where you took your test.

If you hold a full licence issued in a country within the European Union, you don’t need to think about exchanging it for a British licence until it expires (when you turn 70).

If you hold a licence issued in a ‘designated country’ (Andorra, Australia, Barbados, British Virgin Islands, Canada, Cayman Islands, Falkland Islands, Faroe Islands, Hong Kong, Japan, Monaco, New Zealand, Republic of Korea, Republic of North Macedonia, Singapore, South Africa, Switzerland, Taiwan, Ukraine, United Arab Emirates and Zimbabwe), you’ll need to exchange it after 12 months.

To exchange your foreign driving licence for a British one, you’ll need to order the D1 form from the DVLA website. Once complete, send the form to the relevant address along with any requested documents (including your driving licence). There’s currently a £43 exchange fee. You should receive your new driving licence within a few weeks.

If your licence was not issued in the EU or a designated country, after the 12 months, you’ll need to pass the UK practical test before you can carry on driving.

If you’re in any doubt about the validity of your licence, you should consult the government website.
If you’ve developed any health issues while you were away, you may also need to tell the DVLA about them if they will affect your ability to drive safely. Here’s a list of the types of health conditions that the DVLA will need to know about.

New or used

Having sorted your driving licence, your car buying journey can begin. The first question you’ll need to ask yourself will be whether to buy new or used. The answer to this question might depend on how long you plan to stay in the UK – if you’re just coming home short-term or you’re making a permanent move.

Buying used


If you’re only going to stop by for a year at most, it probably makes more sense to look at the used car market.
The used card market is busy with activity in the UK, with approximately eight million used cars sold in a typical year. This figure underlines the enormous breadth of choice when buying a used car.

The explosion of cars bought on finance in the UK (more on that later) means that there are more motors entering the used car market. The three-year cycle of car finance deals mean that drivers are returning to dealerships much sooner than they would have – with dealers then selling them on as used.

As a result, there are plenty of excellent used cars to be found at dealerships. However, if you want to get yourself a deal, you should think about buying privately or at auction. Just beware that should the car fail to live up to billing, you will have little comeback with sellers.

That’s why it’s so important to check a car’s MOT history before handing over any money. 


Buying new


When buying new, you don’t need to concern yourself with the car's condition. In fact, you won’t need to think about an MOT for three years. If anything should go wrong with the car before then, the manufacturer’s warranty should cover it but always be sure you know what’s included and what’s not before you sign on the dotted line.

When buying new, you have the luxury of knowing exactly what you’re going to get. In fact, you can often choose the exact specification you want.

The downside is that it’s more expensive to buy new – and if you end up leaving the UK after just a couple of months, you could lose thousands of pounds in depreciation.

If you like the idea of going somewhere in the middle, you can buy a ‘nearly new’ car, which is typically a vehicle from a dealer's demonstration fleet, or one from their 'pre-registered' stock (bought by the dealer to meet sales targets).


Financing your car


The biggest hurdle to getting a car that suits your needs is finances. If you’ve burned through a fair bit of your funds while you’ve been away, you might have to look at car financing – but it can be difficult to get finance as an expat. It’s not beyond the realms of possibility, however, with some specialist car finance firms dealing specifically with expats.

Let’s look at some of the pros and cons of each way to finance buying a car:

Cash


If you’re able to pay the car’s asking price in cash, you’ll own it outright. This means that you’re not tied into any agreement and can sell the car should your circumstances change and you decide to leave the country again.

Paying with cash might also enable you to get the best deal possible, as it provides you with the ability to haggle – something every car buyer should do, even if you’re not particularly comfortable with bargaining!
The downside of paying with cash is that you’re limited to what you can afford. That might mean you have to compromise a little on what you want – perhaps opting for a car with a slightly higher mileage or overlooking a poor service history.

But it all depends on how much money you have at your disposal. Whatever your budget, make sure you have enough money to cover the running costs of the car, such as expat car insurance, road tax and any repairs you might have to make to the vehicle.

Personal loan

If you don’t have much cash to your name, you might have to go down the route of taking out a finance agreement to secure your four wheels.

The first option you may wish to consider is getting a personal from a bank, building society or finance provider. A personal loan will allow you to spread the cost of your car over a number of years. But you’ll need to factor in any interest (plus other charges) that’s payable on top of the money owed.

To get a loan from a traditional lender, you’ll likely need to show a good credit score – this can be tricky if you’ve been out of the country for a period of time.


Hire purchase (HP)


Hire purchase is fairly self-explanatory – you effectively hire the car until the last payment has been made, which is when you’ll become the legal owner.

HP is a finance agreement where the loan is secured against the car. In other words, if you fail to keep up with payments, the lender can take the car back.

HP agreements can be negotiated directly with a car dealer, making them convenient to arrange. You’ll need to pay a deposit of around 10%, then pay fixed monthly payments over an agreed time period.

HP offers buyers access to new cars, where ordinarily they might not be able to afford them. But it’s accepted that you’ll pay more than more than the car’s value over the duration of the agreement.


Personal contract purchase (PCP)


Similar to HP, but monthly payments are typically lower and more affordable. Instead of getting a loan for the full cost of the car, your monthly payments cover the difference between its price brand new and the predicted value of the car at the end of the hire agreement.

As such, at the end of the agreement, you will need to pay the car’s resale value in order to keep it. Or you can simply return the car to the dealer, paying just for any charges you might have incurred.

PCP agreements are quite rigid in terms of how many miles you drive in a year – if you go over your limit, you’ll need to pay per mile, which can prove expensive.

If you’re unsure how long you’re going to be in the UK, a PCP agreement might not be for you. To end the agreement early, you must have paid half the value of the vehicle. If you haven’t, you’ll need to pay the difference before you can send the car back to the dealer.

GettyImages-1160181567-(3).jpg


Leasing – personal contract hire (PCH)


If you have no desire to own a vehicle outright, you might want to consider leasing or personal contract hire. It works in a similar way to PCP, with you paying a dealer an agreed monthly amount for use of the car – servicing and maintenance are often included (the dealer has a vested interest in ensuring the vehicle remains in good condition).

At the end of the agreement, you simply hand the keys back to the dealer with no balloon payment to have to think about.

While leasing can prove more expensive on a monthly basis than PCP, you’ll benefit from greater flexibility to switch providers. Also, if you have no plans to stay longer than a year in the UK, you can concentrate your efforts on a 12-month agreement.

Things to keep in mind before getting a car on finance:
  • Can you afford the monthly payments?
    Think about how you will finance the monthly payment as well as the other costs of motoring.
  • How much is insurance?
    You might be able to save some money by seeking out expat car insurance from a specialist like the Insurance Factory.
  • Don’t sign anything until you understand exactly what you’re paying for
    This should include mileage limits, balloon payments and maintenance costs.
  • Understand the penalties
    What will you be charged if you don’t keep up with the payments? Could they repossess the car?
  • Shop around
    Do you research so you know exactly what your car is worth and don’t be afraid to haggle.

 

Timing the purchase of your car


Now you know how you’re going to finance your car, you need to time your purchase to perfection.
Obviously, if you need a set of wheels as soon as you touch down, this might be less of an issue.

But, if you can afford to bide your time a little, you’re best off approaching a dealer at the end of their sales quarter – in March, June, September and December – when they’ll be in a rush to shift cars. Their bonuses depend on them hitting certain sales targets, and it’s the worst-kept industry secret that they are prepared to negotiate and offer attractive finance packages to reach their goal.

It’s also best to go at a quiet time when there are fewer buyers to compete with in the showroom. Pay a visit during the week when salespeople are twiddling their thumbs, desperate to do a deal to make the day worthwhile.

If you’re buying privately, look for a car that has been on the market for a little while. The seller might be more open to dropping the price in order to get rid. At the same time, you need to be mindful that there’s no underlying reason why the car hasn’t yet sold – is there something wrong with it that’s putting other buyers’ off?

You can check the MOT history of a car on the government’s website. And remember that tax no longer passes with the vehicle. You will need to tax your car as soon as it comes into your possession. The previous owner will be able to get a refund on any tax that’s unused.


What car do you need?


You shouldn’t let a good deal cloud your judgement on your choice of car – you don’t want to end up with a vehicle that is unsuitable for your needs, or proves extremely expensive to insure (even with expat car insurance).

When deciding on your car, ask yourself:
·       Will I be driving a lot of miles? If so, you’ll want something that is fairly fuel efficient.

·       How much luggage will I be hauling around? If it’s a fair bit, you might want to concentrate on a car with a decent-sized boot.

·       How comfortable or accessible do I need it to be? If you’re planning to do a fair bit of travelling around the country, you’ll definitely want a comfy driving position. And is it big enough for a wheelchair or accessible access if you need it?

·       Is it important that I do my bit for the environment? Getting an electric or hybrid vehicle isn’t cheap, but you’ll be future-proofing your purchase and it may save you money on emission zone charges.
Draw up a list of your essential requirements and make sure you tick off each one. Also, make sure you test drive every car you’re interested in before you put in an offer.

Should you go electric?


There’s an ever-growing argument to buy an electric car. Beyond reducing your carbon footprint, you can get a discount on the price of brand new low-emission vehicles (LEVs) through a government grant.

The grant couldn’t be easier to obtain. When buying an LEV from a dealer, the value of the grant will automatically be taken off the vehicle’s price. The largest grant you can get for cars is £1,500.

Buying an electric car also means you don’t have to worry about the new Ultra Low Emissions Zone (ULEZ) when driving in London. The ULEZ has recently expanded to cover all areas inside the North and South Circular roads.

The charge (£12.50) is levied on top of the £15 daily Congestion Charge and is, in effect, 24 hours a day, seven days a week. In a fully electric car, you’re exempt from both charges.

Other cities in the UK are introducing low emissions zones including Bristol, Cambridge and Cardiff, in an effort to drive down their collective carbon footprint.

GettyImages-1354041251-(1).jpg
Picking up your car – a checklist


Having found the perfect car for your needs and agreed on a deal, it’s time to pick up your new ride. But before you drive it off, you just need to make sure everything is present and correct

Double-check for the following:

·       Logbook, or V5C. When selling a car nowadays, sellers will typically register the change of ownership online. If so, supply them with your e-mail address and ensure you’re given the tear-off V5C/2 ‘new keeper’s details’ to temporarily prove your ownership of the vehicle you’ve bought. You’ll receive an email from the DVLA once they’ve processed the change of ownership.

·       Servicing booklet. If the car is new, the servicing booklet will be empty. If it’s used, ideally, the servicing booklet will be up to date, going some way to proving the previous owner has looked after the car and major servicing has been done.

·       Manuals. While you can find most car manuals online these days, it’s still nice to have them in their physical form, guiding you on how to use the car’s controls.

·       Spare wheel. Not all new cars come with spare wheels – but if you were promised one, check it's there along with the tools needed to change it.

·       Spare keys. Make sure you’re given two sets of keys if they were advertised with the car – replacements can be expensive.

·       Sales contract. Whether you’ve bought the car with cash or have opted for finance, make sure you have a copy of the agreement.


MOT, tax and insurance


With a bit of luck, you won’t need to worry about putting your new car in for an MOT straight away – if it’s brand new off the production line, you have three years before you even need to think about it. If it’s more than three years old, it will need an MOT every year.

However, you will definitely need to tax your vehicle before you drive it away. As of October 2014, vehicle tax is not transferable. To tax a vehicle, you need the green ‘new keeper’ slip from the car’s log book.

Some vehicles are exempt from paying vehicle excise duty, but you still need to fill in the relevant form on the government website.

Finally, before you can legally drive your new car, you need to cover it with expat car insurance.


Get an expat car insurance quote from Insurance Factory today


If you’ve been away for a while, it can take a little while to readjust to UK roads. At the Insurance Factory, we understand this and make it as easy as possible to get back on the road.

The expat insurance policies we arrange are especially for those returning to the UK after living in EU or Commonwealth countries.

They can be tailored to your individual requirements, and flexible payment options are available, too, helping you to balance the other costs of motoring.

Get a quote for expat car insurance today.