A new survey has revealed a third of drivers are still unaware that finance deals can be used for second-hand vehicles, as well as new cars. The research by used car site AA Cars found 31 percent of drivers had no idea which finance options are available to them when buying a used vehicle.
The study of almost 14,000 drivers revealed just 61 percent of drivers were aware that a personal loan from high-street lenders such as banks can be used to buy a used car, while less than half (49 percent) realised this was also true for Hire Purchase (HP) agreements. Just a third of those questioned (34 percent) thought Personal Contract Purchase (PCP) agreements could be used.
Despite this, AA Cars claims used car finance market is experiencing more rapid growth than new car finance, with the total value of finance up 34 percent in April 2022, compared with the same month in 2021. However, data from the Finance and Leasing Association showed there was a one-percent uplift in the value of advances in the new car market over the same period.
Whether that is down to rising prices in the used car market and the supply issues in the new car sector remains unclear, but the AA Cars survey showed drivers believe used car dealers could do more to make it easier to access and understand the finance options available.
More than 80 percent of respondents said they thought dealers should offer “tailored” advice that makes it easier to access car finance, while two in five (44 percent) said dealers should explain all the costs involved with a finance deal, including monthly payments and additional charges. A third (31 percent) also said the process would be better if dealers explained the finance options available.
Similarly, a fifth (22 percent) said they would want a discount if they financed the vehicle through a dealer, while 18 percent would want the dealer to explain what would happen if the driver’s circumstances changed and they could no longer afford the monthly payments.
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“Car finance has proved increasingly popular among used car buyers this year, but it is worrying to see just how many have misconceptions about the finance options open to them,” said James Fairclough, the CEO of AA Cars. “While the majority of drivers are aware that they could take out a personal loan, fewer realise that Hire Purchase and Personal Contract Purchase agreements can be used on second-hand cars as well as new.
“It is important that drivers are aware of all their options, so they can make a fully-informed decision about the car they are buying and how they are going to pay for it. Dealers can offer prospective used car buyers better choice, and thus a better service, by helping them understand what finance options are available, the costs involved, and by encouraging them to step back and do a comparison to ensure they choose the product that suits them best.”