Drivers adopt phone finance model

Drivers are beginning to treat new cars like they do new handsets.

A detailed state-of-the-industry study on UK motorist buying habits found that more and more are choosing finance models in car purchase that mirror those used in mobile phone contracts.

According to online car leasing firm ContractHireAndLeasing.com, the majority of enquiries in 2016 saw customers choose two-year contracts – the same length as a standard mobile phone contract.

The report focuses on the UK online automotive market in 2016, with data from the company’s extensive customer base and the Finance and Leasing Association. It shows personal contract hire (PCH), or leasing, is becoming more and more popular in the UK.

In fact, the value of the UK personal leasing sector grew by a huge 42% in 2016, and now accounts for eight per cent of all point of sale finance provided to consumers for new cars. In contrast, the value of the hire purchase (HP) market fell 15% in 2016.

The report, shows 59.2% of enquiries on leasing deals related to two-year lease agreements, with just over one in ten (11.5%) enquiries for longer four-year deals.

Mike Best, head of sales at ContractHireAndLeasing.com, said, ‘It’s becoming quite clear that consumers are turning their back on ownership in favour of usership. Leasing is going from strength to strength because people want access to products and services without the hassle, costs and constraints of ownership. Being able to drive a new car every two years is a very appealing prospect.’