With the cost of living in the UK continuing to increase, many Brits may be looking at where they can trim their expenses – but what everyday expenses are increasing at the quickest rates?
Delving into the data, car finance specialist Zuto, reveals which everyday expenditure has risen the sharpest over a ten-year period. Combining ONS, Ofcom and Statista data with internal customer data, Zuto has compared how the monthly costs of car finance have risen against other regular payments such as mortgages and pet insurance.
Interestingly, the research found that mobile phone contracts have increased fastest since 2013. In 2013 the average phone contract cost Brits around £26.80 a month. Last year, that average had risen to £50.40, averaging a 7.27% increase yearly.
Coming in at second place was monthly electricity bills, which rose by 80.21% across the ten-year period. In 2013, electricity was costing homeowners and renters an average of £57.10 – by 2022, this had risen to just over £100 per month.
The expense which has spiked the sharpest since 2019 is the average monthly rent payment. In 2019, the average rent in the UK was £747, increasing to £1,013 last year – an increase of 35.61% in just three years following the pandemic.
Out of the expenses analysed, car finance has risen at the slowest rate, with the average monthly car finance repayment increasing by less than 15% across a ten-year period. Had it increased at the same rate as mobile phone contracts, car finance payments would cost Brits approximately £411.76 a month on average, £153 more than the actual average payments in 2023!
When we apply the same increase to the average cost of a used car, the average price in 2023 would be £14,267.40, £5,344 more than the actual average cost of a used car in 2023!
While rising at the slowest rates over the last ten years, the average costs of used cars and monthly car finance payments have increased faster since 2019, before the pandemic. This is likely due to higher demand in the used car market and increased prices.
Lucy Sherliker, head of customer at B-Corp accredited Zuto, explains: “In light of the cost of living crisis, it’s really important that consumers feel they have a good understanding of their expenses and feel confident making the right financial decisions. Looking into our customer data, we can see that Zuto’s average finance APRs have only increased by 2% in the last two years, a much lower rate than that of the Bank of England, which has seen an increase of 5150% since August 2021.
“Also, monthly car finance payments remain fixed across your car finance contract. This stability can provide peace of mind during a financially turbulent time.”
Top tips on securing an affordable car finance deal
If you are considering taking out a car finance loan, here are some expert tips on securing the best – and most affordable – deal.
Do your research
You should always begin by researching whether car finance is right for you and, if so, which type is your best option. A recent survey by Zuto found that just 13% of Brits understand PCP well – despite it being the most popular type of car finance.
Build your credit score
A credit score is one of the most important elements of a car finance application. To boost your chances of getting approved for the best deal, building your credit score is the best place to start. This can include making smaller purchases using your credit card and paying them off immediately. Being able to show how you are a responsible borrower will help you access the best deals regarding car finance.
Consider all income streams, including salary as well as any other payments you may receive such as child maintenance allowance. Then, create a realistic budget based on this and all regular expenses, not forgetting to consider costs associated with car ownership, such as car insurance and any maintenance. It is always a good idea to borrow under what you can to allow for any slight change in income or outgoings.
Put down a larger deposit
If you have money to put down a larger deposit, it can be a good idea to ease your monthly payments. However, many may not have this available during this time, so a no deposit car finance option could be a good alternative; ensure your monthly payments are within your budget.