Car finance booms as cost-of-living crisis bites

The cost-of-living crisis is pushing more new and used car buyers to opt for finance rather than cash purchases.

This is according to the latest research by What Car?.

It surveyed 1,060 in-market buyers and of those buying via finance, a quarter (25.8%) said the cost-of-living crisis had influenced their decision to borrow, while 74.2% were always expecting to buy via finance.

Personal Contract Purchase (PCP) and Hire Purchase (HP) plans are most popular among finance buyers, accounting for nearly two-thirds (63.4%) of those buying via finance, while a quarter were undecided. Personal Contract Hire, and bank loans accounted for 9.5% of planned purchases.

Meanwhile, of all 1,060 in-market buyers taking part in the study, 34.7% were looking to purchase in the next four weeks, while 24.3% had plans to buy within one to three months. Nearly a fifth (19.8%) of all buyers were looking to buy a fully electric vehicle.

Steve Huntingford, editor, What Car?, said: “The cost-of-living crisis is clearly influencing  buying decisions, and is already impacting whether people buy via cash or finance. Finance helps spread out the purchase cost over several months and, depending on the deal, buyers can simply hand the car back at the end of the contract and swap for a different model, adding flexibility and reducing commitments.”