Motorists Take Advantage of Finance Deals
Increasing numbers of finance deals in the new-car market have led buyers to upgrade cars more frequently, according to a What Car? survey. A recent poll of 4,000 motoring enthusiasts found that 37 per cent of people are now changing their car more frequently, while 22 per cent said a generous finance deal would be the key reason for trading in their vehicle for a new model.
It seems that such offers are used by many motorists as a cheap way of upgrading to a better-equipped car, as a third of those questioned said that the modern finance solutions, such as personal contract purchase (PCP) deals, made upgrading cars easier.
What Car? editor Steve Hungerford said the new deals were an “effective” way of making new cars more easily affordable. “The range of finance options available to car buyers is now more generous than ever and can often be an effective way to spread the cost of paying for a safer, better-equipped car,” he said.
However, Hungerford also said the trend could be worrying for motorists’ finances.
Pointing to research showing that 40 per cent of British adults have less than £500 in savings and the £48bn rise in unsecured debt between 2012 and 2015, he said the finance options shouldn’t be seen as “free money”.
“Buyers need to ensure they have a financial cushion to cover the costs at the end of their initial payment term in order to stay on the road,” he said. “The final payment to secure a vehicle on a PCP term is typically several thousand pounds, and the deposit on the next car can also require a substantial cash injection. Damage and excess mileage charges on a PCP-financed vehicle could also be an unpleasant surprise if not accounted for, so it is important to read the small print before making the commitment.”