Post from Joe Pattinson, General Manager of Sales and Marketing at BMW Financial Services.
British culture has traditionally seen people preferring to save for high price tag items, like cars, rather than relying on external finance packages. This sentiment was echoed in a recent (and colourful) exchange he had with a gentleman at a petrol station in Luton.
While filling up my car, a fellow fuel-seeker in a Ford Mondeo pulled up behind me with his other half in tow. Standard procedure I thought, as I continued filling up with thoughts of rising petrol prices in mind (thats another blog, for another day). I then received a prompt from the car behind in the form of a beep and gesture. I took this to be an inquisitive signal to simply enquire if I was done, so I gave him the thumbs up and went in to pay for my fuel. Upon returning to the forecourt, I noticed the seemingly innocuous situation had taken a rather bizarre twist. The man has parked his car across the front of mine, leaving me no obvious exit.
I asked him what was going on, to which he replied he was going to run out of fuel and had no choice but to get his car up the hill and in to the petrol station. The man then suggested I back up and go round the other side of the pump and wait behind the person that has just started filling up. Without question but slightly confused, I reversed leaving several people behind me with no choice but to follow suit. As I moved behind the other car he then pulled in to the pump and began to fill up. Then, much to my amazement, he preceded to launch a tirade of abuse at me!
The rant was predictably laden with obscenities not entirely suitable for this blog, but rather interestingly he then expanded on the initial wave of insults to inadvertently raise a couple points central to the car finance debate. Jibes of you cant afford the car and how much were the monthly payments? were laced with irony given my line of work (unbeknown to the man, of course). But this was also a very pertinent example of how people perceive car finance and their attitude towards ownership. With this incident fresh in my mind, it made me think back to a survey we recently conducted to try and understand how people are interpreting purchasing cars on finance.
This produced some intriguing findings to contradict the views of this particular individual. Attitudes to buying cars have changed and savvier consumers have realised that buying a new or used car on finance now carries a number of advantages. Results also revealed four in ten drivers now see finance as a perfectly acceptable way to own the car of their dreams. Furthermore a third of British drivers are happy to rent-to-own their car, thus making the argument of whether or not you can afford the car invalid. There are a number of car finance options available, which can make the car of your dreams be it new or used an affordable reality. These include hire purchase plans (HP), and lease including Personal Contract Plans (PCPs). So if you can afford the repayments, you should be deemed able to afford the car itself.
Contrary to this, the survey also revealed that 22% of car buyers in the UK are making a decision on car finance within two hours. Also, another statistic that raised eyebrows was that 55% dont consult their partner on car finance and make the decision to buy entirely independently (I wonder if the gentleman in the Mondeo would liaise with his other half should he ever be converted to finance?). This is in contrast to other big ticket items such as a new kitchen (63%), holidays (64%) and sofa (64%) which are all more likely to be joint decisions.
In particular, this stat highlights that despite people waking up to the fact that owning a depreciating asset outright just doesnt make sense, consumers arent taking car finance packages as seriously as they ought to. When the man had finished putting his 10 worth of fuel in his car, he waited until I tried to leave and blocked me in again! More hand gestures etc ensued until he finally drove off after a minute or so. I then I made my way back on to the M1, where I was greeted with the same Mondeo in my rear-view mirror, with the man flashing his lights and continuing to gesticulate all the way until I left the motorway for the M25!
Clearly this particular person wasnt an advocate of the finance route, but the current economic climate has forced consumers on the whole to wise-up when making financial decisions such as buying a car. There is no doubt finance is the car purchasing model for the future when you consider how much cars depreciate in value. As younger consumers adopt rent-to-own as the more savvy decision, I have no doubt car finance will become the norm in the not too distant future, as attitudes to the concept of ownership evolve. It is now a viable option to own the car of your dreams, and consumers are starting to realise this. That said, there is still work to be done to change attitudes to ownership and educate people on the benefits of buying a car on finance - as my example of the man in the petrol station fully justifies!
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