Car finance costs soaring

Monthly payments on new car finance contracts have risen by more than 40% on some models since 2019.

This is according to the latest research by What Car?, which found average monthly personal contract purchase (PCP) payments had risen by at least 22.4% across five sample models.

Interestingly, the research also found that while three of the five models were cheaper to buy on finance instead of cash in 2019, all five were more expensive to buy on finance now.

What Car? editor Steve Huntingford said: “PCP finance is the most popular choice for new car buyers, but the differences between the offers available today show the importance in doing your research to compare deals and consider other options such as bank loans when financing a vehicle.

“The car industry is not immune to the challenges of Covid, semiconductor shortages and now energy price increases, and they have combined to cause a significant amount of turmoil in the new car market. However, the price rises are not universal, nor always applicable to finance and cash purchases, so it’s still possible to get a tempting deal if you shop around.”