New car finance up 15%

Published by Motor Finance


Car finance on new cars increased 15 percent by volume in May compared to the same period last year, with more than half of all buyers using dealer finance, according to figures released by the Finance & Leasing Association (FLA).



“Dealers are offering value-for-money deals, which have kept customers coming through the doors,” said Paul Harrison, head of Motor Finance at the FLA.



“This has meant that the amount of dealer finance provided to consumers for new cars has grown by a fifth in the last 12 months compared with the previous 12-month period.”



Business purchases of new cars on finance also grew by 21 percent by volume in the same period compared with a year earlier.



It had been feared that the end of the government’s scrappage scheme—whereby owners of old cars or small vans were able to trade them in for brand new models with a £2,000 incentive—would lead to a drop off in the number of customers wanting to buy new cars, sales of which on finance totalled more than 36,000 in May.

The value of car finance was £485m for May, up 20 percent on last year in terms of value.



Figures on used cars are similar to those of last year with 52,000 being bought with the help of finance.



Harrison said that dealers of new vehicles should not get complacent with the news, however. “The first half of the year has been encouraging for dealers. But we expect to see sales of new cars on finance drop off later in the year while used car finance sales will pick up as second-hand stock becomes more available.”



Commercial Director of buyacar.co.uk Richard Garner has seen the increase in customers taking finance in his own dealership.

“We have also seen a similar increase in the retail price customers are paying year-on-year. It appears that manufacturers believe dealer finance schemes represent a better sales strategy to promotional retail price discounts,”



“Buying a car on finance works for car buyers because they can be less sensitive about price as significant differences in the total cash price of the car only make small differences to the monthly repayment figure.”