Consumers put affordability before car ownership

Car buyers are now more focused on getting a good deal on their finance than on ownership of the vehicle, the latest available data from the motor finance industry suggests.

“Car buying behaviour is changing. Motorists looking for a new model do not always want to be tied into an agreement to buy,” Paul Harrison, Head of Motor Finance at the Finance & Leasing Association, said. “Currently, the most popular dealer finance options involve renting the car for the duration of the contract, and deciding at the end whether to buy it, trade it in, or hand it back to the dealer.

The FLA’s statistics indicate a shift in customer choice. In April, new car leasing and Personal Contract Purchase, where the car remains the property of the finance company, were up by 41% and 10% respectively. In contrast, Hire Purchase was down by 31%. Leasing and PCP together made up 70% of finance provided for new cars bought through dealerships in April.

The number of car buyers choosing to get finance through a dealer rather than a personal loan reached a two-year high, with 55% of new car buyers in the last 12 months choosing dealer finance.

“Economic conditions also mean many people are choosing shorter-term contracts to help them keep greater control of their budgets, and to ensure that their financial commitments reflect their personal circumstances,” Paul Harrison added.