The latest car finance monthly figures show that car finance debt remained at record levels in June, with a fall in new car volumes balanced by an increase in used cars.
The results for June, published today by the Finance and Leasing Association (FLA), show that an 8% fall in new car finance deals was balanced by a 7% increase in used cars deals. The average amount being financed increasing again for both new and used buyers, pushing total borrowing up by 5%.
The fall in the number of new car finance deals matches the SMMT’s official new car registration figures, which also show an 8% reduction compared to the same month last year. However, average new car borrowing is up nearly 9% on last year’s figure, at just under £19,000. This is down by £800 on May’s figure, but still helped keep average borrowing figures at record levels for the first six months of 2017.
The FLA claims that 86% of all private new car sales are financed by its members, which basically means PCP car finance at the dealership. This figure has been steady pretty much all year. Combined with the ever-increasing average borrowing figures, it suggests that car buyers are not heeding the warnings about the levels of car finance debt.
Used car borrowing is also at a record level, with both volumes and overall borrowing up on last year. Volume increased by 7% over June last year, following a similar pattern in May. Used car finance deals for the quarter were up by 4%, despite used car sales falling by more than 13% according to SMMT figures also published today.
Used car overall borrowing was up by 12% over the same month last year, pushing average used car borrowing to £11,400 – an increase of 5% on last year. Unlike new cars, the majority of used car sales are not financed by dealer funding, although the percentage is steadily growing as more used car buyers choose PCP financing.