Around 2.5 million UK drivers feel “trapped” by their vehicle finance package and regret taking the deal, according to a new study.
The research, conducted by mobility company Drover, found that 23 percent of British motorists have used finance deals such as Personal Contract Purchase plans (PCPs) to fund their vehicle, and 28 percent of those are rueing the decision.
Assuming the company’s sample of 1,500 drivers is representative of the UK’s population, that could be as many as 2.5 million motorists who are struggling with their finance deal.
Finance deals enable drivers to purchase a car for a medium-sized deposit, then make monthly payments for a set period, before paying a final ‘balloon’ payment to secure the car outright.
Almost two-thirds (65 percent) of those feel trapped because they can’t afford to pay the final payment that allows the driver to secure the vehicle at the end of the PCP deal. As a result, these drivers are forced into a new deal.
Six in 10 said they couldn’t afford to terminate their arrangement early, either, as they didn’t have the capital to buy their way out of the deal.
As a result, 61 percent of finance customers said they felt as though they were getting a “bad deal”, while 54 percent said that the finance deals they take out “seem to get worse”. Just over half (51 percent) said their personal circumstances had changed and that they can no longer afford to run a vehicle.
However, it seems that many issues are down to customers’ lack of understanding of car finance. More than a third of consumers said they were confused by the finance deals available, while 43 percent said they accepted a deal simply to end the stress of buying a new car.
Felix Leuschner, Drover’s CEO, said: “Buying a car is daunting prospect for many drivers – not only is there so much choice, but car finance deals are hugely confusing.”