Car finance has drastically grown in popularity over the past few years with it offering an attractive alternative to full ownership over a vehicle.
There are an estimated 8.7 million UK drivers with a car finance agreement, but a large proportion of these feel ‘trapped’, claims a new report.
According to new research by Drover, around 28 per cent of drivers with finance deals can’t afford the final payments to keep the car at the end of the contract.
As a result of this drivers are feeling pressured into taking out another finance deal because they don’t want to feel like they lost money they’ve out into a new car.
The survey of 1,500 drivers who are currently in a finance deal found that almost 65 per cent said they could not afford the final payment on their deal and therefore felt obliged to take out another Personal Contract Purchase.
In addition to this, three in five (60 per cent) said they could not afford to terminate their contract early.
Of the motorists trapped, almost two thirds (61 per cent) believe they are getting a bad deal and 54 per cent believed that the next PCP contrast they agree too is worse than the one prior.
The research also revealed that 28 per cent of motorists surveyed had at least three rounds of finance with the same dealer and higher APR rates than their previous deal.
Some drivers claimed to be frustrated by PCP deals saying they weren’t aware of what they were signing up for.
This is evidently costing drivers as almost half (46 per cent) claimed that they did not shop around for a good deal while 36 per cent are not aware of what the rate of interest is.
Drover CEO and founder Felix Leuschner say that motorists should consider other avenues when searching for a new car deal.
“Buying a car is daunting prospect for many drivers – not only is there so much choice, but car finance deals are hugely confusing,” he said.
“We are aiming to help drivers by providing a more flexible way to run a car without the commitment of car finance.”
