More than half of UK drivers (51%) are intending to buy a new or used car in the next six months, according to a survey from comparethemarket.
Drivers are set to spend an average of £15,042 on these cars, with 39% planning to buy either an electric or hybrid vehicle.
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The main reasons that drivers cited for wanting a car included the need to replace their old vehicle (27%), wanting to treat themselves after a difficult year (18%), and switching to a more environmentally friendly model (18%). A further 17% of drivers want to upgrade as they plan to take more road trips this year, and 14% of drivers plan to buy a car because they are worried about using public transport after the pandemic.
Some 63% of respondents considering a car purchase said they are planning to use some form of car finance to help cover the cost of the purchase. However, nearly half (44%) of drivers who said they had previously used car finance admitted they did not shop around for a better deal when taking out the loan. In addition, almost a fifth (19%) of drivers used the car finance offered by the dealership selling the vehicle. More than a third (38%) often believe these dealerships will offer the best deals.
Borrowers say that the overall rate of interest is the most important factor for car finance (51%), followed by the length of the loan (37%). A fifth of drivers (21%) also wanted to ensure there is no balloon payment at the end of the loan.
More than a third of borrowers (35%) said they had problems repaying their car loans during the pandemic. This includes 15% of borrowers who took a payment holiday and 9% forced to default on their loans.
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By GlobalDataRob Silvey, manager for car finance at comparethemarket, said: “It is encouraging that so many motorists are keen to hit the road in new cars as lockdown restrictions have been lifted. Lots of drivers will be keen to make up for lost time with trips to visit friends and family and staycations.
“Others will understandably want to reward themselves after making it through a tough year. However, our research shows drivers do need to be careful to avoid being caught out by car finance when buying a new vehicle.
“Taking the finance deal offered by a car dealership can be like getting foreign currency at the airport – it may end up costing considerably more for the convenience. Drivers should always try to shop around on car finance if they want to make sure they get the best deal.”
Rob Silvey, manager for car finance at comparethemarket, said: “It is encouraging that so many motorists are keen to hit the road in new cars as lockdown restrictions have been lifted. Lots of drivers will be keen to make up for lost time with trips to visit friends and family and staycations.
“Others will understandably want to reward themselves after making it through a tough year. However, our research shows drivers do need to be careful to avoid being caught out by car finance when buying a new vehicle.
“Taking the finance deal offered by a car dealership can be like getting foreign currency at the airport – it may end up costing considerably more for the convenience. Drivers should always try to shop around on car finance if they want to make sure they get the best deal.”
Earlier this year, comparethemarket published research stating that car insurance claims fell by 26% year-on-year in 2020, as lockdowns and social distancing restrictions forced a reduction in the number of journeys being taken.
