New research from Compare the Market has found that while older motorists are among the most aware of the choices available to them when financing a car, they are much less likely than younger drivers to research or compare different finance options.
Research of UK drivers who have used car finance found that 83% of those aged 55 and over knew they could get car finance somewhere other than the dealership, compared to 77% of motorists overall.
However, almost three in ten over-55s (29%) considered no separate finance quotations before making their decision, notably higher than 6% of 25- to 34-year-olds.
Only one in three (33%) over-55s considered two or more finance quotations, compared with half (50%) of motorists nationally and more than two-thirds (69%) of 25–34-year-olds.
Older drivers are also significantly less likely to research how they will finance their car. Almost one in four over-55s (23%) did no research at all, compared with 13% nationally and just 4% of those aged 25–34.
Older motorists plan earlier – but shop around less
Despite being less likely to compare deals, older motorists appear to think about how they will pay for a car earlier in the buying process.
More than four in 10 (42%) over-55s first thought seriously about how they would pay for their car before they started looking at particular vehicles, compared with 31% nationally and 24% of 25–34-year-olds.
Older drivers also tend to have lower monthly finance payments. The average payment among over-55s was £277 a month, compared with £333 nationally.
Drivers research the car more than the finance
The findings also suggest that motorists generally devote considerably more time to choosing their car than deciding how to finance it.
Almost a third (32%) of drivers either did no research or spent less than an hour researching how to pay for or finance their vehicle, compared with just 13% who did no research or spent less than an hour researching which car to buy.
This is despite 58% of drivers believing they probably or definitely could have secured a better deal if they had compared more finance options.
There are also significant differences around the country. For example, drivers in Greater London are much more likely to shop around, with 68% considering two or more finance quotations, compared with 50% nationally. However, London motorists also have the highest average monthly payment of the regions surveyed, at £389.
Shopping around and comparing prices online could help motorists find a car finance agreement that suits their needs and financial requirements. It is also important that drivers understand and compare the different car finance options available to them.
With options ranging from PCP and HP agreements to taking out a personal loan, it’s important for drivers to look at a range of available options to help them find an option that suits their individual circumstances.
Abigail Foster, Personal Finance Expert at Compare the Market, comments, “It’s encouraging to see that younger drivers are far more likely to shop around and compare multiple finance quotations before committing. Our research shows that 25- to 34-year-olds compare significantly more options than older age groups, and that habit can make a real difference to what you end up paying.
“Younger drivers are often new to credit and finance, so it’s worth taking the time to understand the full cost of an agreement, not just the headline monthly payment, as balloon payments at the end of your agreement could take drivers by surprise and lead to unexpected costs.
“Comparing the interest rate, the total amount repayable and any fees before signing up could help you avoid paying more than you need to and build good financial habits that will serve you well beyond your first car. Comparing different ways to fund a car shouldn’t feel overwhelming. You can now easily compare deals online first before making a decision.”
Charlie Evans, Money Expert at Compare the Market, added, “Buying a car is one of the biggest financial commitments many households make, yet motorists put far more effort into choosing the car than choosing how to pay for it.
“Our research shows older drivers know finance is available beyond the dealership, but are far less likely to compare options before signing up. It’s a bit of a boomer blind spot. Taking the first deal your car dealer offers might feel more convenient at the time, but without comparing alternatives, it’s hard to know if you’re getting good value. Additionally, shopping around for car finance deals can be done easily with options laid out clearly.
“If you already have car finance, it may be worth checking whether you could refinance, as you could save £843 by doing so. But whichever route you take, it’s important to never borrow more than you can afford to pay back.”
