A quarter of drivers don’t understand car finance options before buying

A quarter of drivers don’t understand car finance options before buying
Car buyers are being left increasingly confused by the finance options being offered to them, a new survey has found.

According to a study carried out by RAC Flexiloan, a quarter of drivers don’t understand the various finance options available to them when coming to an agreement with a dealer or company.

What’s more, 72% failed to shop around for the best deal and took the first finance package offered by a single car dealer.

A third of the buyers approached also admitted they felt they had little control over how much deposit they paid, the scale of their optional final payment or the size of their monthly payments.

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The research found that many drivers are lacking both the knowledge and confidence to challenge initial finance offers. It’s therefore hardly surprising that around 10% of buyers feel like their car payments have continued to remain outside of their control.

A worrying 45% of drivers also admitted they’d been forced to cut back to meet their repayments, with the general consensus being the power lies with dealers and finance companies.

However, RAC Flexiloan is proposing to “challenge” the market with its flexible car finance options.

RAC Flexiloan offers a combination of benefits similar to those offered by a Personal Contract Purchase (PCP), putting the buyers back in the driving seat.

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RAC Flexiloan spokesman Alastair Crossley said: “We saw an opportunity to provide those looking for their next car with a radically different offering and one that puts them in complete control from beginning to end.

“Flexiloan gives buyers the flexibility which schemes like PCP offer, but then offers so much more: buyers can choose to buy any car that is at least two years old and can arrange their finance securely online, meaning there is no need for awkward conversations with pushy sales agents.

“Just as the RAC has innovated to help its members at the roadside – such as being the first breakdown company to provide drivers with a universal spare wheel if their car doesn’t have one in the boot – we are now determined to do the same when it comes to finance.”

Flexiloan benefits include:

  • Low deposits and monthly repayments
  • Various options to pay off the final balance
  • Car ownership from day one
  • No end of agreement penalty fees
  • Freedom to shop around - choose from any car that is at least two years old on sale anywhere in the UK

The Flexiloan website also offers drivers the chance to see how changing one aspect of their finance plan - the deposit, monthly payments, loan term and final payment - will impact another.

Copyright Press Association 2018. Motoring News articles do not reflect the RAC's views unless clearly stated.