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60% of people don’t know the difference between Hire Purchase (HP), Personal Contract Purchase (PCP) and a normal car loan
UK, March 18 2019: UK consumers are baffled about their best options when it comes to buying a car, new research from Experian has revealed.
Finance packages such as Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements are typically used to fund new and used vehicles purchases, with these products totalling £34.2 billion in 2017.*
Despite this, often consumers are left flummoxed when it comes to financing their car purchase, potentially leading them to choose a deal that might not be the best for them and their circumstances.
Nearly two-thirds (60%) of Brits** admitted they don’t know the difference between HP, PCP and a typical car loan – even though these options are how cars are now commonly purchased.
60% also said they didn’t research what finance options were available to them before visiting a dealership, while 78% of people who bought a car entered into the agreement that was offered by the dealer.
When asked what would make research easier, an online comparison service for car finance options was the most favoured solution (36%), followed by knowing exactly what deals they would be eligible for (33%) and more information about available options within the dealership itself (26%).
To better inform consumers about their options and revolutionise the car-buying process, Experian has launched a car finance comparison tool, where consumers can compare a range of finance options for used cars, and see their likelihood of being accepted without it affecting their credit score.
The service, which compares HP, PCP and car loans, is being supported by Admiral Car Finance. Admiral will be the first car finance provider to offer deals through the new tool and Experian is the only place customers can compare Admiral PCP deals. Experian will be adding more lenders in the coming months.
Amir Goshtai, Managing Director of Experian Marketplace, said: “Most cars are purchased using finance packages, but too often people are signing up to deals that they might not understand or be the best option for them, with almost 80% accepting the deal offered to them by a car dealership.
“People are becoming used to checking their eligibility for many financial products like credit cards, loans and even mortgages, and there’s no reason why that shouldn’t apply to financing their next car.
“We want to become the first port of call for car buyers by helping them select the best option of their circumstance before they even set foot inside a dealership. They can then relax about the finance and enjoy searching for the perfect car.”
Scott Cargill, CEO of Admiral Financial Services, said: “We’re delighted that Admiral Car Finance was the first lender to offer secured car finance on Experian. Our customer research backs up their findings that consumers can be confused by car finance options and jargon.
“We launched our online car finance service a year ago with the aim of making car finance easier and more transparent, and it’s great for consumers to see marketplaces like Experian entering this market too.
“Car buyers should know exactly what they’re signing up for and how much they’ll be paying before taking out car finance, and partnerships like ours help make car buyers make informed decisions.”
Car finance comparison marks the latest move from Experian to become the home of eligibility and help consumers make better financial decisions.
By checking their eligibility, consumers can find out what financial products – such as mortgages, credit cards and loans - they are likely to be accepted for without it affecting their credit score.
Media Contacts: Weber Shandwick for Experian
Tel: 020 7861 0762 / Email: firstname.lastname@example.org
Notes to editors:
*UK Car Finance Report, June 2018, Mintel
**2,000 adults were surveyed by One Poll in October 2018
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