An astonishing 25% of under-35s spend as much on car finance as they do on rent with more than half of UK drivers saying their car is their second biggest asset after a house.
These are among the findings of an Opinium survey of 2000 UK drivers commissioned by InsuretheGap.com, a new independent provider of GAP (Guaranteed Asset Protection) insurance.
If found that one in five drivers (21%) 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.
Those in the 25 to 34 year old age bracket were the most likely (40%) 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% of 55-64 year olds saying they finance their cars this way.
Almost half of UK drivers (47%) shunned finance options saying they always buy their car outright. However, 11% 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%) saying the finance or lease costs on their car each month were as much or more than their rent, dropping to 14% for 35 – 44 years old and 5% for over 45s.
“Buying a car is a major investment for people and when over half (57%) of UK drivers say their car is the second biggest asset after their house, drivers need to be protecting their investment, ” said Ben Wooltorton, Director at InsuretheGap, “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.”