Posted 12 February, 2021 at 09:30
One in four car buyers don't understand finance jargon used in dealerships, even as new FCA rules clamp down on dealers selling what’s better for them than the customer
MOTORISTS demand more transparent advice on the best way to finance a car than they get in the typical dealer environment, according to new research by the online car supermarket BuyaCar.co.uk.
The call comes as new rules from the Financial Conduct Authority aim to discourage dealers from selling finance based on the commission they earn, rather than deals that best suit the individual customer’s circumstances.
Interviewing more than 400 customers of mostly traditional car dealerships about their recent car buying experiences, BuyaCar found that motorists want more transparency and independent advice from their dealers, tailored specifically for them.
The research reveals widely varying levels of finance expertise among car buyers and a strong appetite for clearer, more transparent advice.
Almost one in two car buyers say they would be glad if a sales person suggested that they opt for a different car or finance package on the grounds of affordability, with only one in ten saying they would resent suggestions that a cheaper option might be best for them.
While 32.6% of people say that car finance options are already 'completely clear' to them, many remain confused about their car financing options, with one in three saying they routinely ignore dealership sales people's advice anyway.
BuyaCar, which focuses on advising and helping customers rather than selling to them, conducted the study to understand the experience of car buyers in the typical car purchase scenario.
While around one in four people prefer paying cash for their cars, the rest typically take one of a large range of finance products to help fund the deal.
Asked how they would respond if an advisor suggested they look at a cheaper option only one in ten of those questioned said they would be offended. But 47.8% say they would be 'glad' of the honest advice, particularly if it was followed by help to find a package more suitable for them.
With 39.6% of buyers who need finance saying that they are uncertain about the terminology and jargon used to describe different methods of funding their car, it's clear that there is an overwhelming appetite among motorists for more simple advice.
Despite the Covid-19 pandemic, in the 12 months leading to November 2020, more than 1.2 million used cars were financed to the tune of £16.2 billion.*
Andy Oldham, Chief Executive of BuyaCar.co.uk, said: "The eye-watering numbers involved in financing used car purchases in the UK show just how high the stakes are for everyone involved in used car sales - and yet our research shows that many people still want better, clearer advice.
"The need for transparent, friendly, honestly helpful advice could not be underlined more effectively than the fact that only one in ten buyers would be offended if their ability to afford a particular deal was discussed with them, while nearly 40% openly admit that they aren't sure they understand their options as clearly as they want to.
"The fact that nearly one in three people say they tend to ignore the views of car salespeople also highlights the need for a different, more helpful and advisory, approach to the process of changing their car with real confidence.
"We have identified that confidence is the key to a happier car-buying experience and the foundation for confidence is receiving the right help to understand exactly what you are signing up for when you finance your car."