A quarter of drivers who pay for their car on finance didn’t understand the finance options open to them when they took the agreement out, according to new research.
And nearly three-quarters said they took the first product recommended by a single dealer, without shopping around to make sure they were getting the best deal.
With more than 80 per cent of new private car sales involving some form of finance, the study paints a worrying picture of buyers not fully researching their options before committing to a long-term deal.
Many drivers also said that they felt railroaded into taking a particular package by their dealer.
A third of buyers questioned said that the felt they had little or no control over key parts of their finance deal such as the size of deposit, monthly payments or final payment, with the dealer setting out the terms.
A fifth of those who took finance through a dealer also said that they felt pressured into taking the package offered by the dealer and a quarter felt the dealer was more in control of the arrangement than them.
Out of control
The latest figures come amid growing worries over drivers landing themselves in trouble by signing up to finance deals they can’t afford. The issue is so serious that last year the Financial Conduct Authority launched an investigation into the market with a few to tightening rules on lending.
One in 10 of the motorists questioned said that they did not feel in complete control of the payments they are making now. And of those drivers who have previously paid for a car on finance and have found it difficult to make the payments, nearly half (45 per cent) struggled on but cut back on other expenditure, 12 per cent decided to hand the car back but paid a penalty for doing so, while 6 per cent worked more hours in order to make ends meet.
Alastair Crossley of RAC Flexiloan, which conducted the survey, said: “It’s easy to see the appeal of driving away a new or nearly new car by paying a low deposit with low monthly payments as this is something that is used by car dealers across the country to encourage us to part with our hard-earned cash. But our research suggests just how in control dealers and car finance companies are when it comes to deciding how much buyers end up spending – which is a worry.
“Let’s face it – a car is one of the single biggest financial commitments we can make and we should, in theory, enter any financial agreement armed with the right information and the confidence to challenge a poor deal when we see one. But our research suggests that it is actually the dealer or finance company that is really running the show.”