Latest figures from the Finance and Leasing Association (FLA) have found that car finance is growing in popularity.
Car finance is an arrangement that the buyer of the vehicle makes with a third party supplier set up by the dealership. Monthly payments are arranged to pay the money back for the amount of the vehicle. Buyers also have to take into account the cost of running a car with the on-going expense of petrol prices, tax and insurance. This could be a reason car finance is chosen as it’s an easy way to spread the cost of an expensive item.
From the research 68% of new cars that were driven away from forecourts last year were funded by car finance. Personal Contract Plans are also becoming a firm favourite with buyers due to only a small deposit needed to be paid and then continuous monthly payments are made. This plan lasts for three years, once this is up the buyer could then get a new car and the process begins again.
April and June 2012 was found to be a busy month as car finance alone increased by 38% compared to the same period last year. The amount of new cars purchased on finance also rose by 27% and almost 200,000 used cars were purchased on finance, highlighting that buyers choose to spread the cost with used cars as well as brand new.
John Hartnett, head of personal loans at M&S Money, spoke to the Daily Mail about the recent figures saying: “Buying a car is a major purchase, and it is important that motorists spend time looking for a good deal on their finance, as well as searching for their perfect vehicle.
“By spending just a few minutes looking at some of the best finance options available, you will be armed with enough information to judge whether the deal the car salesman is offering you is worth entering into or not.”
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By Amanda Bainbridge