One in five drivers (21 per cent) prefer to budget and pay for their car on a monthly basis, rather than worrying about its total cost knowing they will upgrade once their finance contact runs out, according to a new Opinium survey of 2000 UK drivers commissioned by InsuretheGap.com, a new independent provider of GAP (Guaranteed Asset Protection) insurance, launched by award-winning and FCA regulated, Halo Insurance Services Ltd.
25 to 34-year olds were the most likely (40 per cent) to finance their cars this way, with Scotland, the North East and London coming out as the regions where drivers were the most likely to do this. Over 55s were the least likely to do this with only 18 per cent of 55 to 64-year olds saying they finance their cars this way.
Almost half of UK drivers (47 per cent) shunned finance options saying they always buy their car outright. However, 11per cent claim that they bought their most recent car on finance but wouldn’t have done so in the past.
The proportion of income spent on cars peaked for the under 35s with a fifth (20 per cent) saying the finance or lease costs on their car each month were as much or more than their rent, dropping to 14 per cent for 35 to 44-years old and five per cent for over 45s.
Ben Wooltorton, director at InsuretheGap said: “Buying a car is a major investment for people and when over half (57 per cent) of UK drivers say their car is the second biggest asset after their house, drivers need to be protecting their investment.
“If a car is written off or stolen, the insurance company will usually only pay the market value of the car, not what was paid for it so drivers could be facing a potential ‘gap’ in their finances, particularly if they still have a finance agreement or loan to pay off. A GAP insurance policy from a specialist insurance provider, like InsuretheGap, protects drivers from this.”