Car finance affordability concerns raised by consumers
【Summary】A survey conducted by ALPHERA Financial Services reveals that half of UK consumers who have financed a vehicle purchase in the past year are concerned about the affordability of their monthly payments. Younger car buyers express more unease compared to older buyers. Additionally, 43% of respondents feel that dealers did not encourage them to consider future economic challenges when taking out a finance agreement.
According to a recent survey conducted by ALPHERA Financial Services, half of UK consumers who have financed a vehicle purchase in the past year are now worried about the affordability of their monthly payments. The survey asked participants how concerned they were about being able to afford the payments under their current vehicle finance agreement, with 10% responding as 'very concerned' and 40% as 'somewhat concerned'.
The survey also revealed that younger car buyers are more likely to have concerns about affordability, with 55% of them stating that they were 'somewhat concerned', compared to only 16% of those aged 65 and over.
Interestingly, 43% of respondents mentioned that the dealer did not encourage them to consider potential challenging economic circumstances when discussing affordability before taking out the new finance agreement.
Consumers have different expectations of dealers when it comes to briefing them on potential finance agreements. Among the respondents, 66% believe that dealers have a responsibility to discuss repayment obligations, 58% expect them to explain terms and conditions and any additional charges, and 31% think that dealers should disclose whether the salesperson is qualified or accredited to sell a car finance package.
Kirk Franks, the head of national sales at ALPHERA Financial Services, commented on the findings, stating that they suggest the cost-of-living crisis is still affecting many car buyers. Factors such as inflation, rising interest rates, and higher fuel costs have impacted affordability. Franks also emphasized the importance of dealers ensuring fair value and transparency, in line with the new Consumer Duty.
When determining the affordability of a new vehicle finance agreement, consumers consider the cost of monthly payments as the most important factor (86%), followed by the size of the deposit (63%), and any potential additional finance charges like excess mileage or vehicle damage (42%).
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