Nearly half of young drivers spend as much on car financing as they do on housing, according to a new study. A study by insurance provider Gap InsureTheGap.com found that 47% of drivers between the ages of 18 and 34 report spending as much, if not more, on auto financing as they do on rent or mortgage.
In comparison, the study of 2,000 drivers found the same for only 24% of drivers aged 35 to 54, while only 16% of those over 55 held that position. Men are almost twice as likely to find themselves spending more on cars than on housing, with 33% of men in this situation. In comparison, only 18% of women spend more on their car than on their housing.
The survey also found that more than half of all motorists (56%) “don’t worry” about the total cost of a car when they pay monthly because they know they won’t make the car better. at the end. This was especially true for drivers aged 18 to 34, 71% of whom said they did. Among those over 55, that number fell to 48%.
“Buying a car with finance can be a convenient way to get a new car and may seem like the only option for many young drivers,” said Ben Wooltorton, COO at InsureTheGap.com . “But it might be too easy to lose sight of the ultimate auto costs if people focus only on the affordability of monthly payments rather than the total amount paid out over a finance deal.
“As our survey reveals that almost half of those under 34 now pay more per month for their car than for their housing, the days of buying an old banger as their first car for a few hundred pounds are perhaps be long gone. These costs are expected to continue for the vast majority, as nearly three-quarters of those under 34 say part of the reason they like the ‘pay monthly’ model is their ability to simply ‘upgrade’ when their. financing contract is exhausted. This is something we are used to doing with cellphones, and it seems that applying the same model to car purchases is increasingly popular with younger consumers.
“When a large portion of their income is spent on a car, drivers should look for ways to protect 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 face a financial deficit, especially if they are. they still have a deactivated financing agreement or loan payable. A gap insurance policy from a specialist insurance provider, like InsureTheGap, protects drivers from this.