Our recent figures show that over 87% of consumers using car loans this year placed less than 5% as the vehicle deposit, preferring to use as much loan to value for the car as allowed by the lender. Whilst a small proportion of expensive vehicle purchases over 40,000 did have larger deposits the majority of consumers are electing to finance the majority value of the vehicle. Good interest rates and APR’s from online providers, at dealerships and from direct lenders makes car finance as attractive as the best personal loan rates.
Car loan providers, whether asset divisions of banks or private funding houses, currently all have good liquidity and are looking for grow with sensible underwriting techniques. Consumers are therefore seeing a good option of deals but must be aware of the risks in borrowing with small deposits as if anything goes wrong they could be left with negative equity.
GAP products help to protect the consumer by providing a policy that covers any gap between a write off value and amounts owed on finance agreement. RTI will pay the outstanding amount back to the invoice price of the vehicle. These policies are very useful, however, choosing a policy that does not have a market value clause is vital as this will restrict the amount it may payout on the vehicle. Consumers need to ensure that the policy truly returns the invoice value paid for the vehicle.
Personal car leasing continues to grow and is being strongly support by manufacturer schemes which is making new cars very attractive on monthly payments. The car loans market also saw steady growth in the second half of 2012, however, used vehicle stock prices are still fluctuating around due to supply and demand. Dealers therefore have to pay over trade value to stock their forecourt which has a knock on effect with the retail price for consumers.
For consumers still involved in company car use or purchases, one of the best car loan calculators can be found at Fleetnews.co.uk. This produces a straight forward look at both the employee and employers cost helping to breakdown the costs involved for a company car.
With the closure of Southampton Transit factory van sales in the UK have continued to stay in the doldrums and probably will until more green shoots are seen in the construction industry. But for those looking to find good van finance deals a good batch of options exist and may only require the VAT payment or 3 payments in advance as the deposit element.