Half of UK consumers who have financed a vehicle purchase within the past 12 months are now concerned about the affordability of their monthly payments, according to a new nationwide survey commissioned by Alphera Financial Services.
When asked: “How concerned are you about whether you can afford the payments under your current vehicle finance agreement,” 10% said ‘very concerned’, while 40% said ‘somewhat concerned’.
The survey also indicates that unease about affordability is more widespread among younger car buyers, with 55% saying they were ‘somewhat concerned’, compared to just 16% of those aged 65 years and over.
A significant 43% of respondents said that, when considering affordability, the dealer did not encourage them to ‘make allowances for challenging economic circumstances that might occur in the future (e.g. rising household expenditure due to inflation)’ prior to taking out the new finance agreement.
Consumers have a mix of expectations of dealers when it comes to briefing them on potential finance agreements. 66% believe the dealer has a responsibility to discuss repayment obligations, 58% to explain terms and conditions and any additional charges, and 31% say the dealer should state whether the salesperson is qualified or accredited to sell a car finance package.
Kirk Franks, head of national sales at Alphera Financial Services, said: “These findings suggest that the cost-of-living crisis is still being keenly felt by many car buyers, with inflation, rising interest rates and higher fuel costs impacting affordability. The survey also highlights the importance of dealers ensuring, fair value and transparency – which our own partners have been doing in line with new Consumer Duty.”
When they determine the affordability of a new vehicle finance agreement, the cost of monthly payments is cited most often by consumers as one of their most important considerations (86%), followed by the size of the deposit (63%), and any potential additional finance charges such as excess mileage or vehicle damage (42%).
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