Drivers clueless about best deals on car finance
Motorists could be losing hundreds of euro because they don't know what interest rate they are paying on their car finance deals.
New research shows that more than a quarter of motorists (27pc) have no idea what level of interest they are being charged.
Considering that the majority of loans (51pc) range between €7,000 and €17,000, even a 2pc difference would mean paying up to €340 extra. That equates to nearly two years' road tax on many new cars.
For those who do know what interest rate they are paying, the research shows the variations are significant.
One-fifth (21pc) are paying between 4pc and 5pc on their loans, while 15pc are being charged 6pc-7pc and one-in-eight are faring well on 2pc/3pc. On these figures alone there is a gap of 5pc.
Those in the 18-to-24-year-old bracket seem to be the smartest shoppers, with 64pc paying less than 5pc.
The findings are revealed in a survey conducted this month for Volkswagen Ireland in the lead-up to the new 152-reg period, which starts on July 1.
The survey also found that:
- 25-to-44-year-olds are most likely (20pc) to have a car loan.
- Almost a third (31pc) would consider upgrading to a better-equipped car if it meant reducing running costs.
- One-in-12 motorists borrow more than €20,000.
- Car financing is most common for those in the 25-54 age bracket.
- Just 15pc of those aged 55 or over borrow to finance their car.
- Most motorists (53pc) say they do know their total monthly and annual motoring costs.
Volkswagen Group Ireland chief Lars Himmer said: "It is important that consumers are aware of what their car finance is costing them so they can make the best purchasing decisions."
He said a wide range of new finance solutions had helped people get into new cars, with finance packages such as PCPs (personal contract plans) growing in popularity.
Car finance has given a new edge to competition for buyers among the different brands.
And it is going to become more intense judging by the disclosure that 39pc of those who took part in the survey said they were 'likely' to look at PCPs as an option for their next car.
The survey was carried out online by Ignite Research on a nationally representative sample of 1,000 respondents.
New car sales could extend to 125,000 this year, it is now being predicted.