Car finance costs have risen by almost 50% since Brexit referendum, research shows

Falling value of pound contributes to UK drivers paying up to £98 more per month for cars

Monthly payments for car contracts have increased more than one-and-a-half times as fast as cars' cash prices (Getty Images)

Car finance costs have increased by as much as 49 per cent since Britain voted to leave the European Union, new research has revealed.

The tumbling pound has left UK drivers out of pocket by as much as £98 per month, or £4,606 over the course of the full contract.

Sterling has tumbled in value from more than €1.30 to the pound in May 2016 to barely €1.10 in February 2019.

This has seen PCP finance costs for numerous cars – a large proportion of which are imported from Europe or use many European parts – rocket by up to 49 per cent in monthly payment terms, research has found.

As a result, monthly payments have increased more than one-and-a-half times as fast as cars’ cash prices, putting real pressure on household budgets when drivers come to the end of their current contract and look to change their car.

PCP finance costs have been hit hard recently because the monthly costs are based upon the difference between cars’ cash price – which are going up – and their predicted values at the end of the contract – which have gone down in many cases.

This means drivers signing up for a new contract have to pay far more every month simply to get the same car.

Car firm Parkers studied 14 models finding worrying increases across the board.

A driver of a supermini could expect their costs to leap from around £200 per month to £234 when they came to hand their car back for an identical new one, the research found.

One city car model ramped up from £76 to £113 per month in just two years – an increase of 48 per cent.

Chris Loyd, of Parkers, said: “Parkers research reveals that costs are increasing so fast that drivers who are tied into finance contracts currently may not be able to afford to finance the same car next time around (assuming the same contract terms).

“A Fiat Panda city car that would have set you back £119 per month two years ago is now £153 per month for new customers – despite being one of the oldest small cars still on sale and scoring an abysmal zero-star safety rating.”

Drivers who opt for a diesel BMW 1 Series will have to pay an additional £98 every single month on PCP finance compared with someone who picked up the car 18 months ago.

That means paying a total of £4,606 more in total for exactly the same car.

SWNS