Latest car finance results show no slowdown in borrowing

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The latest numbers posted by the Finance & Leasing Association show that car finance continues to drive car sales across the country, even though the number of new car sales is falling.

Data for February shows that the number of new car finance deals decreased by 2% on last year, in line with the drop in sales. But the amount borrowed increased by 9%, representing an increase of more than 11% in the amount borrowed per car.

February is one of the slowest months of the year for new car sales, so any fluctuations tend to be less important. But the data is bang in line with what has been happening in the industry for the last several years. More than 88% of private new car buyers are taking finance arranged at the dealership, essentially creating a financial monopoly on how new cars are purchased.

Cars bought on finance by consumers through dealerships
New businessFeb 2018% change on prev. year3 months to Feb 2018% change on prev. year12 months to Feb 2018% change on prev. year
New cars
Value of advances (£m)923+9%3,1930%18,917+2%
Number of cars50,765-2%166,558-7%987,020-7%
Used cars
Value of advances (£m)1,410+15%3,925+15%15,884+13%
Number of cars123,033+11%336,391+10%1,384,880+7%
Total cars
Value of advances (£m)2,333+13%7,118+8%34,801+7%
Number of cars173,798+7%502,949+3%2,371,900+1%

Data (c) Finance and Leasing Association

Used car finance continues double-digit growth

Meanwhile, on the used car front, dealer-arranged car finance showed another month of double-digit growth in terms of the number of deals done and the value of those deals.

There is much less fluctuation in the used car market on a month-by-month basis compared to new cars with their biannual plate changes, and it was another record month for used car finance. 11% more deals were done and the average value of those deals grew by just under 4%, resulting in a 15% increase in overall borrowing.

The March new car sales results were fairly disastrous, although much of that was expected after the bubble of last year. With such a sharp decline in sales, we are unlikely to see another record month for borrowing when the March results are published. However, the same trends are likely to be visible, with average debt continuing to increase for both new and used cars.

So far, there isn’t any clear sign that new car buyers are switching to used cars. The growth of used car finance has been on a steady upwards trajectory for several years, and the fall in private new car sales that started nearly two years ago does not appear to have noticeably altered the used car trends.

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Stuart Masson
Stuart Masson
Stuart is the Editorial Director of our suite of sites: The Car Expert, The Van Expert and The Truck Expert. Originally from Australia, Stuart has had a passion for cars and the automotive industry for over thirty years. He spent a decade in automotive retail, and now works tirelessly to help car buyers by providing independent and impartial advice.

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