Research has shown that 47% of drivers with a car on finance do not know how much they have borrowed.
The research by CarGurus shows that 63% of people with finance acknowledge mileage restrictions, but cannot specify what they are. And 54% could not state the penalty charges for exceeding mileage limits.
Plus, 91% of those asked believe they understand how the finance works but when questioned on specifics, they draw a blank.
These statistics coincide with growing concern in the industry about the levels of car finance being sold and the lack of consumer understanding about the agreements they are signing.
CarGurus spokesperson James Drake said: “Car finance can be quite complex and we expected to find some level of consumer misunderstanding.
“What we’ve discovered goes far beyond misunderstanding and clearly needs to be addressed.
"The fact that 47% of drivers with a car on finance couldn’t tell us what they had effectively borrowed is mind boggling.
“Car finance is a valuable tool, but consumers need to take more time to understand and educate themselves, as well as making sure that they only deal with reputable dealers who take the time to explain finance products properly.”
The research also uncovered a disdain for car finance, with 30% claiming that they would never consider it because they wanted to, buy the car outright (72%) and the interest is too high (39%).
One in three of all vehicle owners said that they did not consider finance to be trustworthy, although only 8% went so far as to say it is ‘a scam’.
Nevertheless, 57% of car owners, including those who have a vehicle on finance and those who don’t, described finance as ‘just a way for car dealers to make money’.
Drake said: “To write off car finance completely is almost as financially naïve as not knowing how much you have borrowed. As ever, our advice is that going through the right dealer is essential.
"A professional dealer will always explain finance products clearly and concisely to help the customer make the right choice.
“Ultimately, some buyers may just prefer not to use finance products, but we think it would be short sighted to disregard them on principal, especially when you consider that they could represent a more cost-effective solution in some circumstances.”
If you are not a registered user your comment will go to AM for approval before publishing. To avoid this requirement please register or login.
Login to comment
No comments have been made yet.