Motor finance deposits hold up despite interest hikes

Motor finance deposits and monthly payments have stayed “remarkably consistent” over the last 12 months.

That’s the view of iVendi which identified the trend despite ongoing Bank of England interest increases prompting higher rates for used car buyers.

New figures from iVendi show that a year ago, the average deposit for a used car was £2,859 while the monthly payment was £292.

Today, it said, although the base rate has risen from 1.25% to 5% over that period, it is largely unchanged at £2,932 and £304 respectively.

However, James Tew, CEO at the motor retail technology specialist, said it was notable that in same period, the average price of a vehicle being bought had fallen by £576 to £16,589.

“We’ve seen the rises in Bank of England base rates nudging up the cost of motor finance over the last year and, with the current general economic situation, that cannot fail to have an impact on consumer behaviour.

“What we’re finding with these figures is actually really interesting. Consumers are identifying a remarkably consistent level of deposit and monthly payment with which they feel comfortable and in order to partially offset the higher cost of borrowing, are opting for lower priced cars.

“It’s a really good case study of how individuals can use online tools to arrive at the outcomes that suit them, working through a range of motor finance options and varying the parameters to arrive at a personalised solution.”