Interest rate rises won’t impact vehicle sales

The Bank of England’s decision to rise interest rates to five per cent is not expected to have an immediate impact on vehicle sales.

This is according to Auto Trader, which believes the actual impact on the cost of buying a second hard car will be minimal.

Rachael Jones, Director of automotive finance at Auto Trader, said: “Given the growing squeeze on household finances, the rising interest rates are a concern, but it’s important to remember that unlike a tracker mortgage, car finance is always a fixed monthly cost. It means that in-contract drivers don’t have to worry about base rate increases impacting their monthly outgoings.

“And for those looking to buy a new or second-hand car on finance, it’s also worth putting the increase into context in terms of monthly payments. While the recent increase in interest may well add several hundred pounds to the average mortgage each month, compared to last year, the average used car has only seen an £8 a month rise due to rising interest rates.

“On our marketplace, the growth in rates is having no effect on consumer demand. With average used car prices up around £3,500 in just two years, more drivers than ever are considering finance to help fund their next set of wheels. Despite the current average second-hand car APR reaching 11.4%, the number of people using our finance calculators has increased 15% on last year.”