7:34 am, November 16, 2022
New car monthly finance payments have jumped by more than 40 per cent on some models, new research has found.
What Car? compared typical finance deals between five popular models on sale in 2019 and today.
It found average monthly personal contract purchase (PCP) payments had risen by at least 22.4 per cent across the sample models, with petrol and hybrid variants of the Volvo XC40 recording a 42.5 per cent rise in average monthly payments.
The five models compared by the company were the Ford Puma, Mini hatchback, Seat Ateca, Volkswagen Golf and Volvo XC40, all which have been on sale in their current guises since 2019.
The research found all these models had also recorded at least an 11 per cent rise in list prices, plus interest rates had risen in all examples – and even tripled for one.
What Car? said the findings highlighted the impact of the months of Covid lockdowns, semiconductor chip shortages and the rising cost of living.
While three of the five models compared were cheaper to buy via finance than cash in 2019, all five models cost more to buy via finance today.
However, What Car?’s team of mystery shoppers found some new cars bucked the findings and remain cheaper to buy on finance.
A 42-month PCP deal on a Toyota C-HR 1.8 Hybrid Icon CVT would save the buyer 4.6 per cent over the list price, thanks to generous finance deposit contribution of up to £1,250 and low interest rate of 1.9 per cent. The cash saving equates to £1,362 over the 42-month ownership cycle.
Also, a Ford EcoSport 1.0 Ecoboost 125 Titanium and a BMW 5 Series 530d xDrive M Sport worked out cheaper than their original list price when purchased using PCP finance, with 3.8 per cent and 2.1 per cent savings, equating to £887 and £1,202 over the list price, respectively.
What Car? editor Steve Huntingford said: ‘PCP finance is the most popular choice for new car buyers, but the differences between the offers available today show the importance in doing your research to compare deals and consider other options such as bank loans when financing a vehicle.
‘The car industry is not immune to the challenges of Covid, semiconductor shortages and now energy price increases, and they have combined to cause a significant amount of turmoil in the new car market.
‘However, the price rises are not universal, nor always applicable to finance and cash purchases, so it’s still possible to get a tempting deal if you shop around.’
