7:00 am, July 5, 2022
Nearly a third of drivers are clueless when it comes to finance options for buying used cars.
That’s according to new research published today (Jul 5) by AA Cars.
The AA’s used car website reveals that demand for car finance is rising much more sharply among used car buyers versus those buying new.
The total value of new finance taken out on used cars in April 2022 was up 34 per cent compared with the same month in 2021, according to the Finance & Leasing Association, but it went up by just one per cent in the new car market.
However, AA Cars said that some drivers weren’t still fully informed about what options were available to them.
Although 61 per cent of the 13,947 drivers polled knew that a personal loan from a high street lender such as a bank could be used to buy a used car, just under half (49 per cent) recognised it was true as well for hire purchase agreements.
Meanwhile, just over a third (34 per cent) thought PCP agreements could be used.
AA Cars said the lack of awareness that car finance agreements could be used for second-hand cars meant some drivers were unable to make an informed decision about what vehicles they could afford.
More than two in five (44 per cent) drivers said it would help if dealers explained all the costs involved in buying via car finance, from the monthly payments to any additional charges.
Under a third (31 per cent) said dealers could also make the buying process better and easier if they explained the different types of car finance available.
Meanwhile, over a fifth (22 per cent) wanted a discount on the price tag if finance was taken out through the dealer, while 18 per cent wanted the dealer to explain what would happen if the driver’s circumstances changed and they could no longer afford the monthly payments.
James Fairclough, CEO of AA Cars, said: ‘Car finance has proved increasingly popular among used car buyers this year, but it is worrying to see just how many have misconceptions about the finance options open to them.
‘While the majority of drivers are aware that they could take out a personal loan, fewer realise that hire purchase and personal contract purchase agreements can be used on second-hand cars as well as new.
‘It is important that drivers are aware of all their options so they can make a fully informed decision about the car they are buying and how they are going to pay for it.’
He added: ‘Dealers can offer prospective used car buyers better choice, and thus a better service, by helping them understand what finance options are available, the costs involved, and by encouraging them to step back and do a comparison to ensure they choose the product that suits them best.
‘Drivers are very concerned about rising costs at the moment, and dealers can also offer them peace of mind by selling cars which have been independently inspected.
‘This provides a full picture of a car’s condition and gives consumers an indication of whether it is likely to need expensive repairs in the near future.
‘Warranties can also provide consumers with additional confidence that they will be largely protected from a sudden expense if their car should have problems in the future.’
