Motor finance deposits and monthly payments have stayed “remarkably consistent” over the last 12 months despite ongoing Bank of England interest increases prompting higher rates for used car buyers.
New figures from iVendi show that a year ago, the average deposit for a used car was £2,859 while the monthly payment was £292. Today, although the base rate has risen from 1.25% to 5.0% over that period, it is largely unchanged at £2,932 and £304 respectively.
However, James Tew, CEO, said it was notable that in the same period the average price of a vehicle being bought had fallen by £576 to £16,589.
“We’ve seen the rises in Bank of England base rates nudging up the cost of motor finance over the last year and, with the current general economic situation, that cannot fail to have an impact on consumer behaviour.
“Consumers are identifying a remarkably consistent level of deposit and monthly payment with which they feel comfortable and in order to partially offset the higher cost of borrowing, are opting for lower priced cars.
“It’s a really good case study of how individuals can use online tools to arrive at the outcomes that suit them, working through a range of motor finance options and varying the parameters to arrive at a personalised solution.”
Tew added that these types of examples had interesting implications for how dealers and lenders dealt with their Consumer Duty responsibilities.
“Our experience is proving that a compliant online journey, where the customer is given all the information they need to make an informed choice about their own motor finance needs, is the most effective route to meeting the FCA’s new requirements.
“The statistics show how consumers are using a digital framework to create solutions that meet their individual needs, with what appear to be highly consistent results.
“Of course, because all of this happens online with the customer self-serving, it also minimises the amount of work needed to be undertaken by retailers to support regulation, and works equally well remotely or in the showroom.”
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