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Manufacturers step up help for private buyers

Booming sales of new cars to retail customers have convinced carmakers of the need to maintain, even boost, subsidised finance schemes through the second quarter.

Dealers say buyers are now finding new cars “affordable” despite the drop in value of their part exchange, and this trend is being driven by finance.

Companies which were hesitant with their first-quarter campaigns have now joined the fray. Newly added names launching promoted finance schemes this quarter include Audi, Honda and Volvo and there are more 'special offer' schemes listed overleaf than ever before.

MG Rover created an eight-week waiting list in March for its special edition 25 and 45 Inspiration models at £99 a month. Now it is back with a similar deal on the newly launched MGF 1.6.

Volkswagen, which for so long has resisted low rate finance, dips a tentative toe in the water with an offer on Lupo and an ongoing scheme to shift the entry-level Beetle. It will be interesting to see if these lead to a more aggressive approach.

No single solution is being offered and the type of finance favoured varies widely from company to company. With base interest rates falling, and likely to fall further, 0% finance is relatively cheap and has the advantage of tying customers close to list price.

This is the route favoured by Fiat, Daewoo and perhaps most interesting of all, Vauxhall, which is also still offering price cuts, cunningly disguised as 'customer savings'.

Meanwhile, Ford has pioneered the 'zero-deposit' option and low deposit schemes are also popular with major finance players such as Peugeot and Renault. These schemes are particularly successful at luring customers into new cars for the first time – overcoming any resistance to low part-exchange values and cutting dramatically the attraction of nearly-new.

For the most part, subsidised interest rates have settled around the 9% to 10% range though some carmakers are sticking closer to 13%.

There is certainly plenty of confidence in the market. Most of the current schemes run through until the end of June and we would expect to see more, not less, in time for the September plate change.

Loan Amount Lender APR Monthly Repayment
with PPP
Monthly Repayment
Without PPP
£2,000* Abbey National 15.9% £78.27 £69.18
Barclays 17.9% £82.70 £70.98
HSBC 17.9% £81.88% £70.89
Lloyds-TSB 19.8% £83.35 £72.16
NatWest 20.9% £84.09 £73.44
£5,000 Abbey National 11.9% £186.92 £164.40
Barclays 15.9% £201.07 £173.26
HSBC 13.9% £193.98 £168.68
Lloyds-TSB 15.9% £198.35 £173.03
NatWest 12.9% £190.68 £166.54
£10,000 Abbey National 9.8% £362.24 £319.79
Barclays 13.9% £390.71 £337.99
HSBC 10.9% £371.89 £324.52
Lloyds-TSB 15.9% £396.69 £346.07
NatWest 10.9% £371.56 £324.51
£15,000 Abbey National 9.8% £543.37 £479.69
Barclays 11.9% £568.97 £494.14
HSBC 9.9% £549.50 £480.33
Lloyds-TSB 15.9% £595.04 £519.10
NatWest 9.9% £549.98 £480.34
Source: Automotive Management**

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