New cars: take care before committing your cash
Buying a car is not a process you want to rush. Research backs this up, revealing that just under half of consumers take at least one month to choose a car. However, many are still rushing into an ill-judged car finance decision, with 22% of car buyers in the UK taking a decision on car finance within just two hours. This ‘purchase in haste, repent in leisure’ approach to car finance has been uncovered in a new survey of 1,000 UK car owners by BMW Financial Services. But perhaps of even more concern is that consumers were found to be giving about as much thought to purchasing a sofa as a car finance package.
The survey also found that 55% don’t consult their partner on car finance and make the decision entirely independently, in contrast to other big ticket items such as a new kitchen (63%), holidays (64%) and sofa (64%) which are all more likely to be joint decisions.
But attitudes to car ownership have changed, and savvier consumers have realised that buying a new or used car on finance now carries a number of advantages; in fact four in ten drivers now see finance as a ‘perfectly acceptable’ way to own the car of their dreams. The survey also reveals that a third of British drivers are happy to rent-to-own their car, the majority of these being younger car buyers (35% of 18-24 year olds and 37% of 25-34 year olds). Those aged 65 and above prefer to own outright – even if it means that just over a third of drivers feel they have compromised on their car purchase due to price constraints.
Joe Pattinson, General Manager Sales and Marketing at BMW Financial Services, says: “Finance is the car purchasing model for the future. As younger consumers adopt rent-to-own as the more savvy decision, this is less an indication of the economic climate and more a long term purchasing trend that is here to say. Car finance will become the norm in the not too distant future, as attitudes to the concept of ownership evolve.”
- So, in deciding on the make and model of a car, what are drivers are looking for? Here are the priorities revealed in the poll:
Affordability / within budget (93%)
Functional features (size, number of doors, boot space 90%)
Fuel economy (89%)
Driving performance (83%)
Resale value (54%)
Brand image and status (38%)
Joe Pattinson continues: ” Buying car finance from a dealer was once considered a naive move, like buying travel insurance from a travel agent. Today however what’s on offer from your dealer will often have a better APR than the high street banks can provide, and comes with a host of benefits, including warranty and free breakdown cover, bundled into flexible and increasingly innovative packages.”
Well, he would say that, wouldn’t he. Our advice, in tune with any consumer champion, is to do your homework and shop around. Dealers love buyers who haven’t done their homework and remain clueless about the competitive rates they can get if they do a bit of digging. So do your research, take the time to find out the deals that the manufacturer currently has on offer. These may well include interest-free or low APR rates. And if they don’t, then step back and look elsewhere. Look at the total repayable amount to understand exactly how much a loan will cost you over its lifetime.