The majority of car finance customers do not know the exact costs or mileage limits involved in their contracts, according to a survey from online marketplace CarGurus.
Although virtually all 2,000 respondents were confident they understood what their contract entailed, when questioned further, 47% said that they did not know how much they had borrowed to fund their vehicle. Over half did not know what a PCP is.
63% acknowledged that although they were aware of mileage limits, they did not know what their own limits were specifically. A slightly lower percentage of respondents did not know what the penalties for going over the limits were.
On a more positive note, over 70% of current car finance customers would consider finance for their next car as well.
A third of all drivers expressed mistrust in car finance, saying that it is “too good to be true”. Almost 60% of respondents, whether on a finance deal or not, said that finance was more beneficial to dealers than customers.
James Drake, spokesperson for CarGurus said: “Car finance can be quite complex and when CarGurus commissioned this research, we expected to find some level of consumer misunderstanding. What we’ve discovered goes far beyond misunderstanding and clearly needs to be addressed.
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“The fact that 47% of drivers with a car on finance couldn’t tell us what they had effectively borrowed is mind boggling. Car finance is a valuable tool, but consumers need to take more time to understand and educate themselves, as well as making sure that they only deal with reputable dealers who take the time to explain finance products properly.”
“To write off car finance completely is almost as financially naïve as not knowing how much you have borrowed. Buying a car outright can be costly and a well-structured finance deal can protect consumers from depreciation and make high value cars more affordable.
“As ever, our advice is that going through the right dealer is essential. A professional dealer will always explain finance products clearly and concisely to help the customer make the right choice. Ultimately, some buyers may just prefer not to use finance products, but we think it would be short sighted to disregard them on principal, especially when you consider that they could represent a more cost-effective solution in some circumstances.”