The increasing popularity of car finance deals is contributing to the decline of long-term car ownership, according to AA Cars .
The number of drivers who plan to hang onto their current car for more than five years has dropped considerably – by 11% – since owning their last car. This means there are around 3.4 million fewer drivers who have long term intentions for their current vehicle.
The AA-Populus poll of 20,666 drivers found that a fifth (18%) of cars on the road are currently funded using various forms of car finance, such as Personal Contract Purchase (PCP) or Hire Purchase (HP) plans – which equates to around 700,000 more cars funded using these deals since drivers last bought a car.
Those who used one of these routes to buy their current car are much less likely to hold onto their car in the long term – only a quarter (27%) of drivers using one of these finance options plan to keep their car for more than five years. Four in 10 (39%) intend to hold onto their car for less than three years.
These deals typically give drivers the ability to upgrade or buy their vehicle once the initial term ends. Only two in 10 (20%) consumers using PCP plans actually buy the car at the end of the deal, suggesting that the option to ‘upgrade’ to a new car is propelling the sharp fall in long-term ownership.