Glass's looked at a loan of £6,000 over a 36-month term at last year's interest rate of 3%, the new rate of 4% and a likely rate of 5% by the end of 2004. A £6,000 loan at 3% would have cost £174.49 per month over 36 months. The most recent rise to 4% pushed the monthly payments up to £177.14 and, even if rates rise to 5%, the payment would only increase to £179.83.
"Over recent years, consumers have become increasingly willing to bear a greater burden of debt," commented Alan Cole, Consultant for Glass's Market Intelligence Service. "In this context, and with base rates rising at this relatively modest pace, we see no likelihood of an undue negative impact on demand for vehicle finance over the next few months."