A report from the UK suggests that as many as one in five drivers that avail of car finance do no research into their options, with half simply picking a scheme on the spot at the dealership. A further 41% don’t bother getting any car finance at all.
The analysis by parkers.co.uk suggests that many drivers are paying too much for their car funding because they are oblivious to what they’re signing up for, as well as putting themselves at risk of PCP finance mis-selling by failing to do any research.
Furthermore the research reveals that nearly half of car finance buyers ignore excess mileage charges, with one in four unaware how long their contract is, while more than one in 20 motorists don’t even bother to check how much their monthly payments are.
There’s also a significant lack of understanding about how PCPs work with 22% of respondents to parkers.co.uk‘s survey who have used finance saying they have little or no idea what PCP is. A further 37% is unsure what leasing is.
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.”
Parkers.co.uk has a number of tips on how to get the best finance deal, including 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 as longer contracts mean more interest, and not being fixated on monthly prices as the scheme with the lowest monthly payment isn’t necessarily the best value.