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Carmakers 'captive houses' subsidise consumers offers

There is plenty of evidence to suggest that heavy promotion of finance offers is bringing new car customers back into the showrooms. Not only are sales running well ahead of last year (and ahead of two years ago before the 'Rip-off Britain' campaign broke) but figures from the Finance and Leasing Association show new car point-of-sale finance is increasing.

Jeff Paterson, Glass's Guide editor, says the old claim about there “never being a better time to buy a car” is true for once. He cites low rate finance, free insurance offers and the availability of price discounts as evidence customers are getting a far better deal than 12 months ago. Automotive Management's new car Finance Analysis reveals more car manufacturers are joining the game. Even the much-hyped Mini is available at £199 a month, though not with a particularly competitive interest rate.

The offers are likely to remain in place at least until the end of September - and may even improve further on the back of lower Bank of England base rates. Low base rates mean it is relatively cheap for carmakers to subsidise their 'captive' finance houses' consumer offers and cut monthly payments.

Typical interest rates are down in the 7.9% to 9.9% range with many offering the added bonus of low deposits. Once again, Ford Credit leads the way here with a wide choice of no-deposit plans on Fiesta, Focus and Mondeo.

The alternative approach is 0% finance over an extended period of 24 or 36 months. Fiat, Daewoo and Nissan are taking this route.

Volkswagen Financial Services is a significant newcomer to the market. For the first time it is offering 0% on selected Seat and Skoda models but has yet to bite the bullet on Audi and VW.

HIGH STREET LENDERS (36-MONTH LOANS)
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 15.9% £79.81% £69.19
Lloyds-TSB 19.8% £83.35 £72.16
NatWest 20.9% £84.09 £73.44
£5,000 Abbey National 10.2% £182.22 £160.75
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 8.8% £356.76 £315.51
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 8.8% £535.14 £473.26
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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