Car finance costs have increased by as much as 49% since Britain voted to leave the European Union, research from Parkers Car Finance has found.
As well as the referendum result causing deflation in the value in the pound, reasons for this increase have been ascribed to other significant factors include volatile used car values, especially affecting diesel cars, plus reduced discounts and increased interest charges in several cases.
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A Fiat Panda city car that would have cost a consumer £119 per month two years ago is now £153 per month for new customers. Signing up for a new Panda today could therefore cost an additional £1,580 over the four-year contract compared with someone who signed the contract in January 2017.
A diesel BMW 1 Series could cost an additional £98 every single month on PCP finance compared with someone who picked up the car 18 months ago, costing a total of £4,606 more for the same car.
This increase in monthly finance payments follows the fall in the value of the pound, with UK currency tumbling in value from more than 1.3 euros to the pound in May 2016 to barely 1.1 euros in February 2019.
A significant proportion of vehicles on PCP deals are imported from Europe or use many European parts. Monthly payments are estimated by Parkers to have increased more than one-and-a-half times as fast as vehicle cash prices.
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By GlobalDataThe average monthly payment increase for the 14 models Parkers studied was 17%, significantly more than the general rate of inflation.
Finance costs for a Vauxhall Astra have risen by 9%, taking monthly payments up from £297 per month to £324. The deals studied by Parkers all had the same deposit, mileage limits, and balloon payments over the compared time periods.
VW has moved to prepare its dealer network for an increase in pricing to VW, Skoda and Seat cars and finance leases should there be a no-deal Brexit.
In a message to its dealers shared with Motor Finance, the German manufacturer said any WTO or other tariffs associated with a no-deal Brexit would be passed on down through the chain to consumers via an increase in VW, Seat and Skoda car prices after 28th March 2019.
