New figures from the Sainsbury’s Bank car buying index, which tracks consumers’ car purchase intentions, suggest that 23%(1) of UK adults are currently thinking about buying a car over the next six months. The findings indicate that the average amount each individual anticipates spending is £11,268, which is six per cent lower than six months ago when the average was £12,034.(3)
The research found that loans or other finance remain popular methods of paying for a vehicle, with almost half (48%) of car buyers intending to use some sort of finance. This is supported by the bank’s analysis of its own data which revealed that the average loan amount taken out to purchase a car in H1 2016 was £9,579.(4)
Of those planning on buying a car on finance, 21% of respondents planned on using a credit card, a further 21% said they would take out an unsecured personal loan and 20% would opt for leasing the car. Fifteen per cent planned to buy the car through hire purchase and 14% would opt for a personal contract purchase.
Over a third (35%) of respondents said the main reason for buying a car using a personal finance method was because they believed the total cost of borrowing would be lower. A further 35% wanted fixed monthly payments that would fit in with their budget and 30% felt it would be easier to understand and more straightforward than car finance. Over a quarter (28%)wanted to have the freedom to buy a car from whichever vendor or dealership they preferred; 25% said they didn’t want to worry about saving for a large balloon payment at the end of the term and 19% felt they could get a better interest rate compared to a finance deal.
Simon Ranson, Head of Banking at Sainsbury’s Bank, said: “Despite the automotive market signalling a slowdown(5) almost a quarter of us plan to purchase a car in the next six months. And with some of the lowest interest rates for loans and credit cards we have ever seen, finance is an attractive option. Car buyers should consider all payment options to ensure they make the best decision that will suit their needs and financial situation.”
“A personal loan could offer lower rates than other forms of finance and turns you into an immediate cash buyer which can sometimes give you the edge in price negotiations. Alternatively paying on a purchase credit card with 0% interest can be a good option for financing a deposit.”
Sainsbury’s Bank is offering customers a typical rate of 3.3% on loans between £7,500 and £15,000 taken over one to five years (2). Nectar customers taking out a loan over one to three years can currently apply for a rate of 3.2% APR representative(6).. Sainsbury’s Bank has a loan switcher calculator to help customers gauge whether they might save money by switching their existing loan to a Sainsbury’s Bank loan.
Sainsbury’s Bank Purchase Credit Card offers up to 27 months 0% interest(7). For further information on Sainsbury’s Bank Credit Cards visit https://www.sainsburysbank.co.uk/credit_cards/cca_creditcard_zone.
This press release is information for journalists only and is not intended to be a promotion to be acted upon by consumers.
Notes to Editors
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