Nearly a third of drivers (31%) still don’t know the finance options are available to them when buying a used car, new research from AA Cars, the AA’s used car website, reveals.
Demand for car finance is rising much more sharply among used car buyers compared to those buying new.
According to figures from the Finance & Leasing Association the total value of new finance taken out on used cars in April 2022 was up 34% compared to the same month in 2021, while there was a more modest 1% increase in the new car market.
Despite this, some drivers are still not fully informed about the options available to them. While 61% of drivers were aware that a personal loan from a high street lender, such as a bank, can be used to buy a used car, half (49%) realized this was also true for Hire Purchase agreements and only a third ( 34%) thought Personal Contract Purchase agreements could be used.
According to the AA Cars the lack of awareness that car finance agreements can be used for second-hand cars means that some drivers are not able to make a fully-informed decision about the choices of vehicles that they could afford within their budget.
Over 80% of the nearly 14,000 drivers surveyed said dealers could offer tailored advice to make the process of accessing car finance easier and better.
Two in five (44%) drivers said it would be helpful if dealers explained all the costs involved in making a purchase through car finance, from the monthly payments to any additional charges.
A third (31%) said dealers could also make the car buying process better and easier if they explained the different types of car finance available.
Meanwhile a fifth (22%) would want a discount on the vehicle’s price tag if car finance were taken out through the dealer, while 18% would want the dealer to explain what would happen if the driver’s circumstances changed and they could no longer afford the monthly payments.
James Fairclough, CEO of AA Cars, said: “Car finance has proved increasingly popular among used car buyers this year, but it is worrying to see just how many have misconceptions about the finance options open to them.
“While the majority of drivers are aware that they could take out a personal loan, fewer realize that Hire Purchase and Personal Contract Purchase agreements can be used on second-hand cars as well as new.
“It is important that drivers are aware of all their options, so they can make a fully-informed decision about the car they are buying and how they are going to pay for it.”