Survey finds young motorists are confused about car finance
The new car finance market grew by 13% in value last year. With new deals flooding the market and low monthly payments featuring prominently in advertising, more and more people are choosing car finance as a way to fund their new car purchases. However, a poll conducted by Marmalade, the specialist telematics insurer for young drivers, found that the majority felt they didn’t know enough about car finance, felt perplexed by the range of options available or wouldn’t consider car finance at all.
The poll of drivers aged 17-24 asked if they would consider using car finance to buy a new car. Just 24% said they would consider using finance or have used it in the past, 38% percent said they never would and a further 38% said they didn’t know enough or understand the myriad of options available.
According to figures released by the FLA (Finance and Leasing Association), the new car finance market grew by 13% in value and 5% in volume year-on-year in March. Across the quarter, it was up by 10% and 3% in the same criteria compared with Q1 of 2016. These deals often appeal to young motorist but the survey by Marmalade indicates that many don’t have the information they need to make an informed decision which may result in them being tied into deals they don’t want or need.
Crispin Moger, CEO of Marmalade, commented: “Despite the Bank of England announcing that regulators would be investigating the practices involved in issuing car finance deals, consumer car finance deals, including PCP, rose in the first quarter of 2017. Wherever you look online, in magazines or on TV drivers are bombarded by car finance deals. While there are good deals to be had, there is a growing concern that motorists aren’t aware of what the policies mean, which can lead to a host of problems.
“We would always recommend that young motorists talk with their parents or a trusted family member before making this big financial decision. They can help you weigh up the pros and cons of each option and if you’re still unsure, then the Money Advice Service is a great source of professional, impartial advice. Car finance isn’t a bad thing, but poor deals can be crippling for young motorists and we believe more education needs to be done to change the way these deals are communicated and that motorists are aware of what they are signing up to.”
Young driver and Marmalade customer Amy Thomas offered this advice to young drivers: “First things first, find a car in your price range, DO NOT IMPULSE BUY. This can lead to you spending an unnecessary amount of money on a car that could possibly not be the car you thought you wanted. Have a serious think about the costs and why you want that specific car. Whether you buy the car outright or get it on finance, make sure you can afford the car otherwise you can get into a sticky situation, and no one wants that!
“Always, always, ALWAYS ask yourself why? Why do I like this car? Why do I want this car? Is it affordable? Is it right for me? Do I really need this car right now? Once you can answer those questions with valid answers then go ahead with the purchase! Also, do not feel pressured by the dealer to buy the car, always buy on your terms. If you feel pressured then go away, think about it and again, ask yourself why? Is it because they've offered you a brilliant deal or is it because it's what you want? All of this is important!”
Marmalade offers young drivers a guide to buying your first car on finance, as well as a range of straight forward car and insurance packages for young drivers. Its Fuel & Go offer helps drivers secure a car with a low deposit and free insurance, discounted insurance or it provides a contribution towards a deposit. For more information visit: https://www.wearemarmalade.co.uk/cars-for-young-drivers.