Up until recently, new car sales in the UK were growing at an incredible rate. This was thanks largely to rise of affordable financing agreements and personal contract plans (PCPs). These accounted for around 80% of new vehicle registrations in 2016.
This figure has declined considerably in the last two years. Largely because consumer confidence in diesel vehicles fell and economic uncertainty began to take hold. These factors combined triggered a 2.8% decline in new car registrations in February. This marks the 11th consecutive month of decline in the process.
Financing has also become less popular among consumers. Despite the fact that this is often the only viable option for growing families who are looking to up-size their vehicles. We’ll consider this further below. Asking how families can effectively manage such an investment.
Why has Car Financing Become Less Popular Among Consumers?
In many ways, it’s easy to understand why financing was able to drive such growth in the new car sales market. It’s benefits for growing families are also difficult to ignore.
According to research from AutoTrader, an estimated 37% of buyers entered into financing agreements. As this enabled them to spread out a relatively large payment over a period of years.
A further 36% claimed that financing was central to their plans of buying a car. As they would otherwise have struggled to afford the size, make and model of vehicle to suit their needs.
These benefits remain relevant to this day. But unfortunately some customers have been discouraged from taking out finance agreements by factors such as rising inflation and stagnant wage growth.
This has impacted on the consumers’ ability to meet repayments. Whilst families were also alarmed to hear that the Financial Conduct Authority (FCA) planned to scrutinize the car finance market at some point in the near future.
Finding Value in the Right Kind of Financing
Whist there is some validity to these observations. Its worth noting they have been largely offset by the diversification of the market and the range of flexible lending products now available to customers.
This makes it easier than ever for growing families to up-size their vehicles and meet their constantly changing needs. Without it having to compromise their quality of life or ability to fund their overall cost of living.
The AA is a service provided that has spearheaded evolution in the car finance market. Primarily through the range of choice that it offers to customers. At present, the brand offers access to 31 independent and trusted finance partners, enabling customers to compare the market thoroughly and access the best possible deals.
This could potentially make the difference for growing families, who must rely on trusted and value-conscious finance agreements to afford up-sized vehicles.