The cost of living crisis and how it affects people applying for car finance
19 April 2023
By Joy Pearson
In recent years, the UK has experience a significant cost of living crisis, with rising prices and stagnant wages putting pressure on households. This crisis has had a wide-ranging impact on people's finances, including their ability to afford car finance. In today's post, we will explore how the cost of living crisis has affected car finance in the UK and what we can expect in the future.
The cost of living crisis has has a significant impact on people's ability to afford car finance. Rising prices for essential goods such as food and energy, combined with stagnant wages, means that many households are struggling to make ends meet. As a result, there has been a decline in the number of people taking out car finance deals, as they are unable to afford the monthly payments.
Likewise, the rising cost of living has led to a shift in the types of vehicles people are choosing to finance. In the past, larger and more expensive cars were popular choices for finance deals. However, as people's finances have become stretched, there has been a shift towards smaller and more economical vehicles that are cheaper to run and finance.
Furthermore, the cost of living crisis has led to an increase in demand for used cars. As people struggle to afford new cars, they are turning to the used car market, which has seen prices rise. This as made it more difficult for people to access affordable car finance deals.
Looking ahead, it is likely that the cost of living crisis will continue to have an impact on car finance in the UK. With wages failing to keep pace with inflation and rising energy costs, many households will continue to struggle to afford car finance deals, like before. As a result, we can expect to see a continued shift towards more economical vehicles and an increase in demand for used cars.
In response to these challenges, we can also expect to see lenders offering more flexible finance deals, such as longer repayment periods and lower interest rates. This will help to make car finance more affordable for people on lower incomes and provide greater access to affordable finance deals.
However it is important to note that the cost of living crisis is a complex issue, and car finance is just one area that is affected. It will require a coordinated response from governments, businesses, and individuals to address the underlying causes of this crisis and ensure that people can afford the essentials, including cars.
Taking everything into account, the cost of living crisis has had a significant impact on car finance in the UK, with rising prices and stagnant wages putting pressure on households. This has led to a shift towards more economical vehicles and an increase in demand for used cars. Looking ahead, we can expect to see lenders offering more flexible finance deals, but a coordinated response will be required to address the underlying cause of the crisis.