Half of buyers say they will question whether to use dealer provided car finance on their next purchase following last year’s landmark Court of Appeal ruling on undisclosed commission payments and the pending Supreme Court ruling on the matter.
Fifty-three per cent of the 2,000 car buyers polled for the latest MOTORS Consumer Insight Panel said they were aware of the issue surrounding car finance sales, rising to 59% for men and 63% of over 55s. Awareness was higher for those planning to buy new cars (63%) than used cars (50%).
Nearly half (46%) of those who were aware of the issue claimed they would either think twice about using dealer provided finance in the future or refuse it altogether.
“Car finance sales are in the spotlight and the ongoing legal process, coupled with some high profile campaigning around compensation, has understandably placed doubt in the minds of some buyers,” said Lucy Tugby, Marketing Director of MOTORS.
“Our research shows how awareness of the issue varies widely depending on factors such as demographics and whether customers are buying new or used.
“We advise that dealers are open about the action they have taken to improve their processes to build trust with car buyers. This provides an opportunity to improve transparency earlier in the sale process, as per the Financial Conduct Authority’s guidance on understanding the role of commissions and finance,” she said.
The research also identified how car buyers are increasingly moving away from outright purchase to monthly payments.
While 61% of owners purchased their current car outright, this will drop to 53% in the next buying cycle.
Overall the average price paid by outright purchase customers for their last car was £13,957. While monthly payments currently average £334, with used cars over two years at £325, nearly new cars at £344 and new cars at £354.
“Consumer appetite is there for moving to monthly payments for convenience and affordability. On the back of this, dealers could grow finance penetration by creating attractive offers in a transparent and compliant manner,” said Tugby.
