Finance Jargon Gets Drivers Confused
More than a quarter of people wouldn’t feel confident explaining any of the jargon on a car finance agreement, despite 77% of new car purchases using dealer-sourced finance. Terms like ‘personal contract hire’, ‘deposit contribution’ and ‘gap insurance’ are leaving drivers in a spin, potentially not knowing what they are actually signing up for.
BMW Financial Services quizzed more than 1,000 people about the jargon commonly found on car purchasing agreements, with a cumulative two thirds saying they would have trouble explaining at least one of the key features, like ‘annual percentage rates’ and ‘excess mileage’. And 28% said that they couldn’t explain the meaning of any of this jargon at all.
Just 18% of drivers were able to explain the meaning of personal contract hire, while only 19% of people could explain what a personal contract purchase was, 19% could define gap insurance and the same proportion understood the minimum future value.
Suzanne Gray, General Manager, Group Customer Strategy, BMW Group Financial Services, says: “It’s important for buyers to know exactly what they are committing to when they sign up to finance contracts. These results go a long way to illustrating the state of the nation’s knowledge about finance.”
“The results of this survey are very timely for us. They show that simplified motor finance is long overdue and we are responding to a public need for clear terms. That’s why we’ve simplified our financial packages. Whenever someone walks into any BMW or MINI Centre, the core finance package will be the same. Buyers will get the full breakdown of the contract, not just monthly charges, and there will be no set-up fees. As well as this, our dealers continue to receive training to help customers better understand the jargon around motor finance, making the process more straightforward and user friendly for everyone.”