A survey of 1,500 UK drivers by car subscription service Drover has shown that more than two-fifths of drivers on car finance (43%) accepted a deal prematurely to end difficulties with buying a car, while 34% felt confused by the types of motor finance deals.
PCP deals remain by a significant margin the most popular type of car financing available on the market. Issues in the survey primarily related not to the initial finance offering but to the balloon payment at the conclusion of the contract.
65% of respondents told Drover that they can’t afford the final payment, often leading to a new PCP deal. Almost two-thirds related that they couldn’t afford to terminate their arrangement early.
An issue identified in the survey was a continuing cycle of finance leading a minority of consumers not searching for the best types of motor finance on the market. 28% of drivers had at least three rounds of finance with the same dealer, with many reporting a higher APR than their previous deal (34%). Almost half of drivers on finance did not shop around (46%). Around two-fifths of those surveyed were unaware of the Voluntary Termination option.
Felix Leuschner, founder and chief executive officer of Drover, said: “Buying a car is daunting prospect for many drivers. Not only is there so much choice, but car finance deals are hugely confusing. We are aiming to help drivers by providing a more flexible way to run a car without the commitment of car finance. Drivers sign-up on a monthly basis, and can swap their car for a different model or cancel at anytime, and the monthly fee is inclusive of everything apart from fuel, taking the hassle out of driving.”
In April BMW Group UK partnered with Drover to offer BMW and Mini cars on a monthly subscription basis. According to BMW, customers can swap vehicles, pause or end the subscription at any time, without long-term commitments.