UK consumers are in need of direction when assessing finance options for car purchases, according to a study from Experian.
Finance packages including Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements are typically used to fund new and used vehicle purchases, but many consumers struggle to understand which deal is best for them.
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According to the survey of 2,000 consumers, 60% of UK consumers admitted to not knowing the difference between HP, PCP and a typical car loan – despite the growing popularity of such options. HP and PCP agreements accounted for £34.2bn in 2017.
Six in 10 respondents also said they did not research what finance options were available to them before visiting a dealership, while 78% of people who bought a car entered into the agreement that was offered to them at the dealership.
An online comparison service was cited as the most popular solution for making research easier (36%), followed by knowing exactly what deals they would be eligible for (33%), and more information about available options within the dealership itself (26%).
Amir Goshtai, managing director of Experian Marketplace, said that too often people are entering into agreements that they may not understand or be the best option for them. “People are becoming used to checking their eligibility for many financial products like credit cards, loans and even mortgages, and there is no reason why that should not apply to financing their next car,” he said.
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By GlobalDataExperian has launched an online comparison tool to help better inform customers about their options and assess their likelihood of being accepted without it affecting their credit score. The service is being supported by Admiral Car Finance.
Scott Cargill, chief executive of Admiral Financial Services, added: “Car buyers should know exactly what they’re signing up for and how much they’ll be paying before taking out car finance, and partnerships like ours help make car buyers make informed decisions.”
