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AA Cars says that borrowing is more likely for used cars
At a time when new car sales are at their highest since 2007, research by AA Financial Services reveals that one in five borrowers will take out a personal loan to buy a car this year.*
New figures from The Society of Motor Manufacturers and Traders (SMMT) show a sharp increase in the registration of new cars: 7.6% more vehicles were registered last month than in January 2013.
Mark Huggins, Director of AA Financial Services put the growing demand for new cars down to increased consumer confidence and attractive financing deals, which accounted for around three-quarters of new car sales last year.
Huggins comments: "It's clear to see that consumer confidence has returned and people aren't as wary of getting credit as they perhaps were a couple of years ago. "The majority of cars sell for between £7,500 and £10,000; it's an expensive purchase so finance packages are a popular way to pay. This is also the range where interest rates are lowest for personal loans, so they're pretty popular with car buyers. Of course, the better your credit rating the better the rate you'll get."
According to David Bruce, director of the AA's used car sales platform, taking out a loan is more likely for buyers of used vehicles. "The kind of smart finance options such as leasing aren't generally available for used cars. But buyers opting for a nearly new car can benefit from existing manufacturer warranties as well as perhaps buying a still-current car without suffering the high initial depreciation that goes with many brand new models.
For canny used car buyers a personal loan can pave the way to a good, low-mileage car
David Bruce, director of AA Cars
"For canny used car buyers a personal loan can pave the way to a good, low-mileage car with all the features of a brand new one – and the AA currently has a discounted loan rate for members looking for finance." **
The current loans rate for non-members is also an attractive proposition.**
*Research was carried out by Populus among 1,777 adults aged 18+ from 16 December 2013 to 5 January 2014.
** 4.7% APR representative for AA members for loans between £7,500 and £15,000. Representative example: £7,500 over 60 months at a fixed interest rate of 4.7% per annum would result in a representative APR of 4.7% APR monthly repayments of £140.16 and a total amount payable of £8,409.60.
4.8% APR representative for non-members, for loans between £7,500 and £15,000. Representative example: £7,500 over 60 months at a fixed interest rate of 4.8% per annum would result in a representative APR of 4.8% APR monthly repayments of £140. 49 and a total amount payable of £8,429.40.
AA Loans are provided by Creation Consumer Finance Limited. AA acts exclusively in relation to loans as a credit intermediary for Creation Consumer Finance Limited. Full terms and conditions apply.
(12 February 2014)