Household Bills
Popularity of finance deals see drivers switch car more regularly
The popularity of car finance deals means drivers are upgrading their vehicle earlier than they previously would have, research by AA Cars shows.
The number of drivers who plan to hang onto their current car for more than five years has dropped by 11% since owning their last car, according to the poll.
This means there are around 3.4 million fewer drivers who have long term intentions for their current vehicle.
The AA-Populus survey of 20,000 drivers found that a fifth (18%) of cars on the road are currently funded using some form of car finance, such as Personal Contract Purchase (PCP) or Hire Purchase (HP) plans – which equates to around 700,000 more cars funded using these deals since drivers last bought a car.
People who used one of these routes to buy their current car are much less likely to hold onto their car in the long term – only a quarter (27%) of drivers using one of these finance options plan to keep their car for more than five years. Four in 10 (39%) intend to hold onto their car for less than three years.
These deals typically give drivers the ability to upgrade or buy their vehicle once the initial term ends. Only two in 10 (20%) consumers using PCP plans to actually buy the car at the end of the deal.
James Fairclough, CEO of AA Cars, said: “Even a few years ago, the majority of drivers would have expected to hang onto their car for as long as possible in an attempt to wring as much value out of it before heading back to the forecourt.
“The growing confidence in car finance products has helped to change this dynamic. The three-year cycle of PCP and HP deals mean that drivers are returning to dealerships much sooner than they would have.
“This is good news in a number of respects; as technology advances, cars are becoming cleaner and more efficient. The cyclical effect of these deals means that buyers are introducing these more environmentally-friendly motors to the roads, rather than persevering with older and less environmentally friendly cars.
“The domino effect for the used car market is that a glut of nearly-new stock continues to flood forecourts and is available to buyers who are looking to prioritise value over a brand new registration.”
For more, see: Buying a new car? The finance options explained
