Finance Becoming More Important in Car Purchasing

Apr 20 2011

In a recent interview with AM-Online, General Manager at BMW/Mini Financial Services, Joe Pattinson, expressed a number of opinions that are of interest to ordinary car finance buyers.

According to Pattinson, car finance buyers are getting increasingly savvy when choosing a finance package.

Pattison says that the attitude of the average consumer towards car finance is starting to change.  They are starting to realise that the right financing package not only allows them to regularly buy a new car, but also to buy a better model than what would have been possible otherwise.

While personal leasing has been a popular way to finance a car in the U.S. for quite some time, U.K. consumers have not embraced leasing in large numbers.  An increasing number of them are, however, making use of personal contract purchase packages to buy the car of their dreams.  These packages carry a fixed monthly instalment and allow a consumer to drive a brand new vehicle for periods varying between two and four years.

With this finance model ownership of the car does not pass to the consumer until the end of the contract period.  At that stage the buyer has three choices:

1.    Buying the car at the agreed price as stipulated in the contract.
2.    Returning the car if it is worth less than the price agreed on.
3.    Trading it in on another car, using any equity as a deposit on the new car.

At the moment the majority of car finance buyers prefer the third option.  This allows them to regularly upgrade to a later model, usually without having to pay a large deposit.

Author - Louise Hutchinson
 

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