Cost of Living: We Don’t Buy Any Car

The Financial Ombudsman has revealed that complaints about car finance deals have more than doubled in the last 12 months, mainly due to drivers struggling to meet monthly repayments.

The Ombudsman apparently received 4,622 complaints about HP agreements in the second quarter of 2023, which is the highest number since 2019.

Vehicle-related complaints now make up a quarter of all complaints received by the Financial Ombudsman.

Less than half of all private new car buyers in 2009 used dealer financing. By 2018, this had risen to more than 90%, and has decreased slightly to 78% currently. In 2022, finance deals made up 84% of all new car sales.

This comes as mortgage borrowers on variable deals have seen their payments increase significantly due to the recent rise in interest rates, leading them unable to afford other payments such as vehicle finance, as their previously-disposable income vanishes.

Car insurance costs have also increased, and are at an all-time high, having risen by 41% in the past year. Amongst other things, this is driven by the increase in electric vehicles, where analysts have found it difficult to price battery repairs.

StepChange, the debt charity, has seen an increase of 14% in the number of people with vehicle finance approaching them for help.