More than 20% of drivers using car finance do no research into their options, with half simply picking a scheme on the spot at the dealership, Parkers.co.uk research has discovered.
Furthermore, 41% of motorists don’t bother getting any car finance advice whatsoever.
Many motorists could be opening themselves up to an expensive or unsuitable contract, as they don’t understand what they’re signing up for.
A survey carried out by Parkers.co.uk has established that a large proportion of motorists are oblivious to what they are committing to, with significant numbers 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 still, 22% of respondents who have used finance have little or no idea what PCP is, with 37% unsure what leasing is. This confirms a fundamental lack of knowledge among many drivers.
Parkers.co.uk finance editor, Christofer Lloyd says: ‘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.’
Content Marketing Executive at Motors.co.uk