Nine in 10 UK adults struggle to understand car finance options available on the market, new research from Zopa has found.
In a survey of 2,000 consumers, 47% of people who had recently bought a car with finance are unable to identify which type of finance deal they signed up for. Zopa estimates that the average car buyer could save up to £11,000 over the course of their lifetime by working out the best finance deal available.
The survey also revealed that two thirds of consumers have accepted the first car finance deal offered to them at a dealership, without shopping around for a better deal. A further 48% of people taking out car finance at a dealership admitted to finding the whole process stressful.
One in five respondents said they struggle to understand the language used, while 16% said they do not understand the finance options explained to them.
Additional research from Zopa found that 26% of car-buyers had accepted a higher APR on a car finance deal than they thought they could afford, with half of those people using it to buy the car of their dreams. A further 26% had done so when they needed a car urgently.
“Buying a car is a major financial decision, yet it is so complex it’s nearly impossible for people to work out the best finance option,” said Didier Baclin, Zopa’s chief product officer.
“In the wake of the FCA’s report into the car finance market, Zopa wants to provide a better alternative for people looking to buy a car, doing away with the complex finance deals and baffling jargon. Our aim is to help create a fairer and more transparent car market so that people can take out car finance knowing what they’re signing up for and whether its right for them.”