One in ten can’t confidently explain key financial topics 

10th November 2023

New research by car finance provider, Ford Credit has uncovered a gap in consumer financial literacy with one in ten admitting they can’t confidently explain key financial topics.

More than 50% of people looking to buy a car in the next 12 months plan to use car finance; this comes at a time when the number of vehicles bought using finance increased by more than 100,000 between 2021-2022 alone. However, when asked, 100% of respondents failed to correctly identify elements of a car finance agreement and 62% didn’t know what documents or personal information are required to apply.

The research also discovered that as inflation continues to rise, more people are currently saving for a car (24%) than a deposit for a house (18%) or home renovations (19%). In fact, 80% of the Great British population say they see car ownership as essential. This change in savings tact may not be all that surprising, as only 1 in 5 still believe they will be able to get a foot on the housing ladder, and over a third (38%) have given up on being a homeowner all together.

In addition to this clear consumer knowledge gap, 50% of 18–24-year-olds don’t know what the interest rate on their car loan is; and car owners in Wales are the least clued up overall (57%), more than 10% higher than Scotland, England or Northern Ireland. This pitfall could be equivalent to £4000* of interest charges, that they may not have factored into their long-term budget.

In addition, 1 in 5 worries about finding the right lender or loan (21%). However, once the ball is rolling and people know where to look, and who to speak to at their dealership or online, almost half (47%) don’t find the process of financing their vehicle stressful and of those who have financed a car in the past, 75% said it was easy.

Carlos Treadway Chief Executive Officer from Ford Credit said “Of those looking to purchase a car, the majority are planning to use finance – a trend we have seen increasing over the last few years. In the past finance was an afterthought at the dealership, but as customers move increasingly online and towards electric vehicles, we are seeing finance become the first thing on people’s minds.”

“In fact, our research shows many now view finance as vital as a test drive. With a range of options and decades of experience helping millions of Ford customers, we’re here to reassure drivers that finding car finance to suit their needs is simpler than they might think. These are challenging times but financing an essential life purchase like a car doesn’t have to be stressful.”