September '64' brings car buying bonanza
Car dealers are expected to see a big jump in both new and used car sales as buyers choose the new ‘64’ plate – while others opt for a more recent used car, according to AA Financial Services.
Mark Huggins, director of AA Financial Services, points out that for every new car sold, at least three used cars change hands over subsequent weeks.
“Over the next three months we expect AA Cars, the AA’s network of used car dealers, to be busier than they have been for some years,” he says.
“And with low interest rates, the number of people opting to use car loans to purchase their next car appears to be rising, indicating continued car buying confidence.”
According to a recent Society of Motor Manufacturers and Traders (SMMT) forecast, new car sales are expected to exceed 2.4m units by the end of 2014 – 8.1% up on 2013.
“This is good news for dealers,” Mr Huggins points out.
“Over recent weeks many dealers’ stocks were run down in anticipation of the September car sales bonanza.
“There will be a large influx of used cars being taken in part-exchange and, over the next three months, the used car market could see over 1.25 million vehicles changing hands.”
With growing optimism as the UK emerges from recession, Mr Huggins says that people are beginning to change their cars more frequently. “During the recession, the number of people planning to change their car within two years had fallen to a record low.”
Saving wins over borrowing to pay for a car
According to the AA Financial Services Car Purchase Index, which tracks the car buying intentions of AA members, 40% expect to dig into savings for their new car while 30% expect to use some form of finance to pay for it.
Mark Huggins says: “Being a cash buyer could give you an edge in terms of bargaining for a discount. With a glut of used cars on the market many dealers will be keen to see stock move quickly and may be ready to do a deal.”
However, not everyone has the luxury of savings to spend on a car and, according to the AA’s research; nearly a third of buyers (30%) will opt for finance such as a personal loan.
Mr Huggins notes that it’s worth comparing car finance deals with personal loans. “Shopping around could get you a good interest rate for a personal loan, which then puts you in the position of a cash buyer and enable you to drive a bargain on the forecourt,” he says.
Lending rates are currently exceptionally low. The AA is offering 4.3% APR representative plus free breakdown cover worth £39.99 (or an upgrade for existing AA members) which may appeal to those customers intending to buy or upgrade their car.