The latest car finance results show that the media attention regarding car finance is not reducing the level of borrowing on either new or used cars.
Overall borrowing in August was up despite a continued slowdown in new car sales, according to the latest data from the Finance and Leasing Association (FLA). The number of new cars financed decreased by 8% compared to the same month in 2016, which is less than the 10% fall in private new car sales according to the corresponding SMMT registration data.
New car borrowing was up 2% despite the 8% decrease in volume, meaning that the average amount borrowed by private new car buyers was up 10% on the same period last year. This is in line with the year-to-date results for 2017, and on average new car buyers are borrowing £1,600 more for their new cars in 2017 than they did last year.
86% of private new car buyers financed their car through the dealership, with the vast majority of those using a personal contract purchase (PCP) to fund their new car. This figure has remained stable over the last 12 months, although it’s important to remember that private sales make up less than half of all new car sales, with the majority being fleet and business purchases.
Used car borrowing still growing
Used car results showed that borrowing continues to accelerate. There was 2% growth in the number of used car finance agreements for August compared to last year, but the amount borrowed increased by 8%, so on average buyers were borrowing about 6% more. Again, this is in line with the results for the year to date, with used car buyers borrowing about £540 more for each car than they did last year.
We won’t get used car sales results for the same period until sometime in November, so we will have to wait and see how the borrowing numbers compare to the sales numbers.