Car Finance Market Hits High In The UK

In August, car finance reached a four-year high in terms of market share in the private new car sales sector. The Finance & Leasing Association (FLA) announced that 57.9 percent of people purchasing new cars in the last 12 months used forecourt finance. This included personal contract purchase pcp, other hire purchase arrangements, and leasing.

Compared with August 2010, there was a 17 percent increase in the number of new vehicles purchased using auto financing. For used cars, the increase was 8 percent. Recent trends in sales continued in the new vehicle market, with leasing experiencing a 38 percent increase and personal contract purchase pcp being 24 percent more popular compared to just one year ago. Within the used car market, car buyers also turned to these forms of credit more frequently.

FLA head of motor finance Paul Harrison commented that the figures do not lie in terms of the popularity of forecourt finance. He believes that motor finance offers an advantage over other purchasing methods during an economy like the current one. Customers have the ability to negotiate financing packages that fit their budget.

For individuals with bad credit, car finance options may be restricted. However, many will qualify to lease or enter a hire purchase arrangement. By making payments on time, they help their credit scores improve, making it possible to qualify for low-interest car loans in the future. Now is a great time to improve credit history because interest rates should be low for a while.

Despite gloomy news in other areas of the economy, vehicle financing seems to be shining. Few UK residents have enough money saved to purchase a car outright, making car loans and forecourt financing more popular. As prices continue to rise and paychecks stay steady, vehicle financing should continue to enjoy the spotlight.