Research from Zopa has shown that UK car buyers are confused when picking which car finance option is the best to fund their next purchase.
Just under half of the 1,000 car finance customers surveyed between July 19 and July 25 said that they had bought a car with finance, yet could not identify which kind of finance deal they agreed to.
Zopa estimates that the average car buyer could save up to £11,000 over their lifetime, if they were to have a better understanding of which finance deal is best for them, indicating a weight of responsibility for car retailers to better explain their options.
The study revealed that over two thirds of UK adults (68%) have accepted the first car finance deal offered to them at a dealership, without shopping around for a better deal.
A further 48% of people taking out car finance at a dealership admitted to finding the whole process stressful, Zopa said in a statement, adding: "These complex finance deals, baffling jargon, stressful dealership experiences and difficulties faced comparing prices are leaving Brits confused and paying more than they need to; with car buyers admitting they don’t understand the language (19%), or the finance options explained to them (16%)."
Didier Baclin, Zopa’s chief product officer, said: “Buying a car is a major financial decision, yet it’s so complex it’s nearly impossible for people to work out the best finance option.
“In the wake of the FCA’s report into the car finance market, Zopa wants to provide a better alternative for people looking to buy a car, doing away with the complex finance deals and baffling jargon.
“Our aim is to help create a fairer and more transparent car market so that people can take out car finance knowing what they’re signing up for and whether its right for them.
“At Zopa, people looking for a hassle-free car buying experience can either go via our select broker partners or can sort out their finance online before going to a dealership, putting them in complete control of how they finance their next car.”
Zopa asked 2,000 UK consumers to pick the cheapest finance deal from a list of five options, and nine in 10 people were unable to choose the lowest cost option.
The business, launched in 2005, and its peer-to-peer lending has given people access to loans and investments.
It claimed that its latest research had been undertaken in an attempt to save finance car buyers money.