With the pandemic causing financial havoc there is hope for the millions of car owners who, as of today, can take a car on finance and make money by renting it out to others – an earning opportunity that will help many who are struggling to pay their monthly outgoings.
This industry first has been created by community car sharing provider Karshare, together with their leasing partner. Traditionally, car finance agreements contain sub-hire clauses which prohibit sharing; Lease and Share is the first car finance agreement available in the UK that enables the agreement holder to hire out their vehicles to vetted drivers in their communities. This is an innovation which, according to new research, will be welcomed by consumers.
In a survey of 1,000 people by Karshare, four out of ten (39%) consumers said they have seen their household income decrease because of the pandemic. Well over half (61%) said their monthly car finance agreement repayment is one of their biggest financial concerns and four out of ten (39%) lose sleep worrying about how to pay their fixed monthly outgoings most or all of the time.
A further third of consumers (37%) said they regret taking out the car finance and four out of 10 (41%) don’t plan on taking out another finance contract. In fact, a staggering 83% of consumers are actively seeking out ways to boost their household income.
Graeme Banister, Partnerships Director at Karshare, said: “The pandemic has galvanised consumers into becoming laser focused on their finances. Cars present significant costs for many; the monthly car finance, fuel, maintenance – it’s an expense that is being called into question, particularly at a time when people are working from home more, and are likely to be for the foreseeable future. The fact 600,000 consumers chose to freeze their car finance payments during the pandemic only adds further weight to the call for action to help consumers offset these costs in some way – and avoid unnecessary vehicle repossessions.”
Most years, around a million brand new cars are bought by consumers using car finance agreements. With an average term of three years, there are millions of cars on finance circulating UK roads annually. Lease and Share opens up a whole new opportunity for these consumers to make additional income every month from hiring their car out.
A combination of the pandemic, and the winter months now being upon us, has resulted in a massive shift in consumer mindset and behaviour towards travelling, social distancing and the sharing economy. Consumers are seeking personalised transport options which reduce close contact to others, and with appetite for walking and cycling in cold, wet and dark weather waning, having access to a car for transport becomes a very desirable option. Nearly half (46%) of consumers find the concept of community car sharing appealing and the same number of car owners say they would be happy to share their car with people when they aren’t using it as they welcome the financial boost the sharing economy offers. Existing contractual terms mean consumers with cars on finance are prohibited from hiring them out to others – until now.
Banister continued: “Since the start of the pandemic the Finance and Leasing Association has called for innovation from its members and with our research outlining the urgent need for lenders to act.
“It’s not only for consumers; it’s for the sector as a whole. No-one wants to see consumers defaulting on payments and cars being repossessed when personalised transport is needed. Making changes to the way the sector operates isn’t an option; it’s a necessity and we urge consumers to raise sub-hire with their car finance providers.”
Lisa Smith, a 25-year-old living and working in Bristol, who has a car on finance and is already making £200 a month by hiring her car out on Karshare, said: “I work in HR for a Bristol-based charity which has been hit hard during the pandemic and so I will be going part-time in January. My car spends most of the time parked outside my house as I have a walking commute, plus my boyfriend also has a car so we’re a two-vehicle household. My car finance repayments, fuel and maintenance costs are a regular monthly outgoing, and with my hours reducing in January, finding a way to offset these costs made sense. I’m already earning £200 a month from hiring my car out on Karshare, which I’ve been moving into my savings, and I’m looking forward to seeing the income grow. It provides a financial buffer for us and we also plan to make some home improvements with the extra money.”
Banister concludes: “Shared vehicles are also part of the solution to a more sustainable future. Clogging up roads with yet more cars that sit idle for 96% of the time makes no sense. Sharing vehicles with others, so they can access a car as and when needed, is far better for the environment.”
Karshare enables people to share their cars with others in their community – fully insured and covered for breakdown, using keyless technology. It offers owners the capability of earning up to £550 per month to supplement household incomes and renters the ability to rent a car affordably and easily using their mobile phone. In addition, with keyless technology there is no need for a key exchange keeping the process contact-free.
Lease and Share has launched in Bristol, UK, with plans to roll this out nationwide in early 2021.