According to the Deals on Wheels report by the AA, interest in new registration vehicles has risen by 22 per cent during the past year in spite of five base rate rises by the Bank of England since August 2006. A third (33 per cent) of drivers are looking to buy a new automobile over the next 12 months, in comparison to the 26 per cent recorded in the same time last year.
The financial services provider also pointed to statistics showing that the real cost of cars had decreased by 26 per cent over the last ten years, figures which were suggested to be "impacting people's decisions to make an investment in new wheels".
In comparison, the second-hand car market was shown to have fallen over recent months. Currently, just over a third (36 per cent) of respondents are planning to get a car which is less than three years old - a fall of 16 percentage points from the 44 per cent recorded in a study taken at the start of 2007.
Reliability and mechanical problems are the main factor pushing demand for new cars, accounting for 32 per cent of people surveyed. Concerns over running costs of vehicles make up 28 per cent of consumers' reasons to get a brand new automobile, compared to environmental worries which stand at 18 per cent.
Commenting on the figures, Lloyd East, head of AA Personal Loans, said: "As interest rates rise, UK consumers are beginning to tighten their purse strings. But our research shows strong consumer demand for new registration cars ahead of September 1st. This suggests that reasons for buying a car are not only influenced by price at purchase."
And with about a third of those planning on getting a car set to take out personal loans or showroom finance deal to fund their purchase, Mr East suggested that more people are becoming increasingly concerned about the running costs and the practicality of their cars. "With interest rates rising, the cost of buying a car on finance is increasing and it is therefore essential that people intending to buy a new or used car shop around for the best deal before heading for the forecourt,"he added.
Those in Scotland were revealed to be "keeping their foot on the accelerator" when it comes to buying a car as 41 per cent of consumers in the region are aiming on getting a new vehicle over the coming year. This compares to some 26 per cent of residents in the south of England.
Overall, older Britons are driving the new car market as 52 per cent of those over the age of 55 are set to make such a purchase. Meanwhile, a fifth of 25 to 34-year-olds are looking to do so, as younger people are reported to be much more likely to buy a used automobile.
Earlier this month, Tim Moss, head of loans for moneysupermarket, claimed that those considering buying a new 57 registration car in September could be "taken for a ride" if they choose an uncompetitive finance product. The price comparison website suggested that consumers opting for a showroom deal instead of a cheap personal loan could collectively be paying 140 million pounds in extra interest payments.
While you could go online yourself and search for the cheapest deal possible, it is very rare that you will have the knowledge of where the best deals are and how to get them. A specialist broker knows the ins and outs of the car finance sector and will have lenders in mind from past experience; they will also know what to look for when it comes to car finance and the places you should avoid looking for insurance.
When it comes to financing for your car then without a doubt the best option is to go for a car loan. You can opt to take the finance through a dealership, but this is often the most expensive way of taking a loan to pay for your car. The dealer might throw in incentives to get you to take the finance through them, but even with these in mind it is usually at a much higher rate of interest than letting a specialist broker find you a car loan deal.
If you want the cheapest deal possible then go online with a broker. While in some cases you will have to pay for the brokers fees, it often does save you a great deal of money and it certainly saves you time and the stress of having to search through the many lenders yourself. Along with the best rate of interest the broker can find, they will also take into account any extras that the lender has to offer. And, of course, if you want the added security of knowing exactly how much the repayment will be each month then simply ask the broker to look for a fixed rate car loan for you.
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Louis Rix has sinced written about articles on various topics from Used Car, Finances and Used Car. Louis Rix is a Director of NetCars, one of the UK's leading motoring websites. First established in January 2000, it provides a .. Louis Rix's top article generates over 246000 views. to your Favourites.