Greater transparency needed to boost confidence in dealer finance: Motors research

Three-quarters of car buyers are considering finance options offered by dealers, despite only half of them feeling comfortable with the process.

According to a recent study by MOTORS’ Consumer Insight Panel which surveyed over 2,000 prospective car buyers, dealer financing is a viable option with 63% of those who previously bought their cars outright open to such financing for their next purchase.

Additionally, 94% of current car owners paying in monthly instalments would consider dealer finance for their next vehicle.

The study also explored when buyers start contemplating finance options. Almost half (46%) begin thinking about payment methods before initiating their search, 32% during the initial search phase, and only 11% during both the shortlisting and final decision stages.

Despite the high level of interest, only 51% of those considering dealer finance report feeling comfortable with the process. A notable 34% are neutral, and 15% feel uncomfortable, with the highest discomfort levels seen among used car buyers, women, and young adults aged 18-24.

The main concerns cited by buyers include hidden fees (43%) and higher interest rates (43%), followed by pressure to finalise deals (24%).

Lucy Tugby, marketing director of MOTORS, commenting on the findings, said: "Our research shows that dealers are the preferred choice for financing among car buyers. However, the discomfort many buyers feel needs to be addressed by retailers.

“The convenience of arranging finance at the point of sale is a major advantage, but increasing transparency could significantly improve customer confidence and conversion rates."

Tugby also noted an opportunity for dealers to engage buyers who typically purchase outright because the current economic climate is encouraging many to opt for funded monthly payments instead of using their savings.