The Chancellor, Jeremy Hunt, has delivered his Spring budget and there’s some good news for motorists. Firstly, he announced that the planned 11p rise in fuel duty will be cancelled and that last year’s 5p cut will be maintained for another 12 months. Fuel duty is a tax paid on the sale of fuel and the government believes that scrapping this will save the average motorist around £100 a year in fuel costs.
Secondly, and I’m sure we’ll all be happy about this one, the government have announced a further £200m will go towards pothole repairs across the UK. The Government already spends £500m a year on Britain’s pothole fund but anyone who’s driven the roads of Cumbria and south west Scotland this winter will be pleased to hear about this increase.
Most people understand that the Bank Rate, or most commonly known as the Bank of England Base rate, is the rate that influences the rate that we pay for mortgages but it may also impact the cost of borrowing for car finance and personal loans as this increases our costs which we may have to pass on to customers.
In November 2021, the Bank Rate was 0.1%, however it has been steadily rising since then with the most recent 0.25% increase (23/03/2023) taking it to 4.25%.
The Bank of England (BoE) uses the Bank Rate to control inflation by increasing borrowing rates to reduce disposable income and therefore demand for goods. Inflation is a general increase in the price of goods or services over time. For example, the BoE target rate for inflation is 2% per year, which means if you buy something for £1 today it should cost you £1.02p next year. However, inflation in the UK has been higher than this for some time (currently over 10%) and the Bank of England are attempting to use the Bank Rate to bring it back to the 2% target.
If you have an existing finance agreement it’s likely to be at a fixed rate and will not change, keeping your monthly payments same until it ends.
If however, you’re looking at borrowing to purchasing a new vehicle soon, the interest rate you pay is likely to be higher. But don’t worry. The rate you’re offered will be valid for 28 days, regardless of whether the BoE increases their rate. Otherwise, we will provide you with an up to date quote.
Looking for a quote? You can visit our website to use our finance calculator at any time or call our team in the office to discuss your needs further. They’re always happy to help and will explain everything to you fully.