Car Finance Confusion

Car Finance Confusion

02 Aug

By Clarissa Hearn

UK insurance comparison site Confused.com recently conducted a mystery shop of car dealerships across the UK, which found that three in five (59%) dealers didn’t make drivers aware of restrictions like mileage and balloon payments, and one in 10 (10%) refused to let shoppers get a better car finance deal elsewhere.

The mystery shop saw undercover buyers visit 100 dealerships up and down the country. They were instructed to enquire about buying a second-hand car, valued at £10,000 and to ask about the car finance options to fund the purchase. One in six (17%) of our mystery shoppers said they felt ‘pushed’ into taking out car finance there and then.

Buyer experience at main dealerships vs independent dealerships
 
  Total Main dealerships (split) Independent dealerships (split)
Felt pressured into a sale 17% 41% 59%
Felt less informed after reading the paperwork 20% 45% 55%
Made aware of restrictions 41% 59% 42%
 
Shoppers also found main dealerships were less pushy compared to independents, and main dealerships were also more likely to make buyers aware of restrictions such as mileage caps and balloon payments.

The research concludes that there is wide-spread confusion about car finance – a worrying prospect given it’s a market that has almost doubled since 2008, with 2.3 million consumer motor finance agreements in 2017. But education and awareness will go some way towards improving consumer experience.

Amanda Stretton, motoring editor at Confused.com, says:
“Drivers need to feel empowered that they are going to get the best deal when they walk into a dealership. If drivers are not being told they may be able to get a better rate elsewhere then they could end up spending £1,000 or more than they would if they took out car finance online.
“Car finance is fundamentally confusing and far greater clarity is needed. Some drivers are landed with finance plans they don’t understand and are even struggling to meet payments as a result. It’s crucial drivers have clear and transparent information about all of the finance options available to them when buying a car. That’s why we’ve launched a guide helping drivers to weigh up the pros and cons of the different finance options available.
“We want to put the power back into the hands of drivers, so our car finance comparison service weighs up the different options side-by-side giving sight of the exact rate drivers will pay for the loan. This way drivers can be sure they have landed a great deal and put the money they could save on interest payments to better use.”
 
You can read Confused.com's handy go-to-guide here

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