1 in 5 drivers do not research car finance

A study recently published by Parkers state that more than 20% of all drivers using finance to fund a car purchase don’t look at all of the options available and just take what is being offered at the dealership when in the process of buying their car.

Added to this it has been revealed that over 40% of drivers taking out a car finance package don’t get any financial advice whatsoever.

The survey carried out by Parkers.co.uk has established that a large proportion of motorists have no idea as to what they are committing to each month, with a significant amount of drivers failing to check such basic factors as the following:

  • 48% – Penalties (eg excess mileage charges)
  • 27% – Interest rate payable
  • 23% – Contract length
  • 22% – Total amount payable
  • 6% – Monthly payments

Having established this lack of knowledge among drivers, Parkers.co.uk has collated a series of top tips on how to get the best finance deal, and to make sure they don’t opt for an unsuitable or unexpectedly expensive finance scheme. These include:

  • Haggling on the list price before haggling on the finance details
  • Choosing an in-stock car for a bigger discount
  • Not being coerced into a longer contract; longer contracts mean more interest
  • Not fixating on monthly prices; the scheme with the lowest monthly payment isn’t necessarily the best value

More concerning is that 22% of respondents who have used finance in the past have little or no idea what PCP is, with 37% not sure what leasing is. This confirms a fundamental lack of knowledge among many motorists in the UK right now.

Parkers.co.uk finance editor, Christofer Lloyd has said: ‘You wouldn’t sign up for a mortgage without comparing prices or shopping around, so why accept the first finance deal you’re offered when getting a car? There may be some unscrupulous sales people out there, but car buyers can can do much more to get themselves the best deal.’

Keith Adams, Parkers.co.uk editor adds: ‘Hysterical stories around car finance, especially when people are nervous, are never a good thing. We should educate around ensuring that PCP can be a good thing, but only if you go into it with your eyes open and don’t over-extend yourself. Lenders should be responsible, but equally borrowers should be well informed.’

With the cost of motoring rising year on year with new road fund licence rules in place for new cars, higher car insurance premiums and a fluctuating oil price, this is where motorists should really be analyzing the cost of purchasing a car much more closely