There has recently been a huge shift in how consumers pay for the products they want. Millenials, in particular, now favour subscription services over the purchase of individual items. For example, the sales of albums and singles have been in free-fall for the music industry over the last decade or so. Instead, more and more young people prefer to pay for a subscription service like Spotify or Amazon Music, which provides access to a whole library of music to stream for a monthly payment. Similar subscription based models have been adopted for everything from movies to literature, email marketing, books, web hosting, grooming, wine to food. A similar service has also become popular in the motor industry with the rise of car finance.
The popularity of the subscription model goes some way towards explaining why many young people are now purchasing their cars on finance. The likes of Spotify, Netflix and the aforementioned subscription services have succeeded because they allow young people, at a time in which the cost of living is so high, to manage their finances better. You know exactly how much will be exiting your account every month by using subscriptions instead of paying for products as you go. The same can be said for car finance, in which you pay for a car in fixed monthly instalments.
Car finance is essentially like subscribing to a vehicle in the same way that Netflix allows you to subscribe to a library of movies. Instead of purchasing hundreds of movies, as you might normally, you get them given to you all at once and customers simply pay a monthly fee to access them. With car finance, you do not purchase a car in a one-off lump-sum payment. You pay a small monthly fee for the vehicle, which you can then drive as much as you desire.
There is one notable advantage which car finance has over a lot of similar models though. Movies, books and music aren’t that expensive to pay for individually. They will cost between £5 and £10 each with the average person consuming a few per month. A car, however, can set you back thousands of pounds in many cases. Therefore, offsetting the cost in monthly instalments is not only a great way to manage and check your finances; it also ensures you do not suffer from difficult short-term debt.