The value of finance deals used by consumers to buy new cars has reached a new monthly record, figures from the Finance and Leasing Association (FLA) show.
Drivers spent £3.6 billion on car finance deals in March, a 13 per cent rise on the same month in 2016, with most purchases done through personal contract purchases.
Some 194,348 new cars were bought on finance by consumers at UK dealerships in the month, a five per cent rise on March 2016.
The easier access to finance and increased sales of both new and used cars means that it’s even more important that you offer clients an excellent experience in the showroom. Alongside your general motor trade insurance, you should also consider adequate levels of demonstration cover to provide test drives upon request.
“The first quarter of 2017 saw consumer car finance new business volumes increase in line with the industry’s expectations of single-digit growth for the year, overall,” said Geraldine Kilkelly, head of research and chief economist at the FLA.
Consumers spent a record £32.5 billion on car finance deals in the year to March, the organisation added.
The impressive figures are likely to have been driven by changes to Vehicle Excise Duty in April, which saw many motorists buy new vehicles before the reforms kicked in.
While some bodies, including the Bank of England and the Financial Conduct Authority have expressed concerns about car finance deals, Adrian Dally, head of motor finance at the FLA, told the BBC lenders were being responsible.
“We do not share their concerns,” he told the BBC. “Lending is responsible. This is a sustainable model going forwards.”
“Today’s figures are a further indication of the popularity of car finance deals,” said Joanna Elson, chief executive of the Money Advice Trust.
“For many consumers this offers access to a car that would otherwise be unaffordable, however it is important that the affordability of offers is fully assessed and that consumers are clear on the teams so that they know from the outside what they are committing to, and can plan accordingly.”