Rae Castillon on May 26, 2024 No Comments
Across the world, people are finding it harder to be able to run a car. Supply problems during CoVid led to the price of vehicles soaring, in most parts of the world. Things have calmed down a bit, but the price of cars is still much higher than they were in 2019.
In addition, most people are struggling with a far higher cost of living and also having to pay higher interest rates for car finance. It is not a stretch to say that car ownership is rapidly turning into a luxury many cannot afford.
However, there is hope. Both consumers and the car industry are adjusting to this new reality and coming up with innovative ways to keep car ownership within reach of the masses.
Bad-credit Car Finance
In the past, if someone had a bad credit history there was virtually no chance of them being able to secure car finance. That is gradually changing. Financing companies are recognizing that a significant percentage of the population has bad credit. According to Experian 19% of Brits and 16% of Americans. That is a significant percentage of the car-buying public. So big that car dealers and finance providers cannot afford to ignore them. As a result, they are now offering bad credit car finance deals that are suitable for people in this situation. Other products such as benefits car financing, secured loans, guarantor deals and more are also helping people who are living on relatively low incomes to get approved for car finance.
Borrowing For Longer
To spread the cost to the point where they can afford to meet the monthly repayments consumers are increasingly borrowing for longer. According to Edmunds, in the USA, 34.43% of people are now opting for 73 to 84-month car financing deals. Significantly, up on 2018 levels, when only 28.6% of people were opting for this type of contract.
Tapping Into Relatively New Financing Products
In the UK, the Personal Contract Purchase model is being used to help more people get on the road. This form of car finance works very much like the leasing system that is so popular in the USA. The debt is structured so that a significant percentage of the purchase price is paid at the end of the contract as a balloon payment. This means that the monthly repayment amount is usually significantly lower than it would be if the car were bought using hire purchase. In addition, many dealers offer PCP deals that allow people to drive the car away without putting down much of a deposit. Some even offer zero-deposit deals.
Turning To Charities For Help
People are increasingly turning to charities to see if they can get help with buying or running a car. In many countries, small segments of the population can find assistance. For example, in the UK, Family Fund helps parents of disabled children to run a car. In America, Vehicles for Change, Charity Cars, and Ronald McDonald House Charities and several others use donated vehicles to get people back on the road.
Interest In Fractional Ownership And Car Sharing Is Increasing
Consumers are becoming more open-minded about how they get around. In India, fractional ownership has taken off. Especially now that it is possible to have a share in everyday cars like Tatas, with fractions starting as low as 8.33%. Joint ownership and car sharing are also growing in popularity in the UK.
In the USA, firms like Uber are betting on people being willing to drive shared cars and are almost certainly right to do so. IBM’s study “A New Relationship – People and Cars,” revealed that 42% of the 16,000 people they interviewed were interested in using the subscription model.
There are also companies like RelayRides and GetAround helping people rent out their personal vehicles to people. To date, demand for this service has also been strong.
Things are changing, but it is important not to get too carried away. When given a choice, people still prefer to own their own vehicle.
