Majority of Car Buyers Pay with Finance
More than nine out of ten new cars bought in the UK in the last year were paid for with finance deals, according to the Finance and Leasing Association.
The latest data from the FLA revealed that in the 12 months up to April this year, 91% of privately purchased new cars were paid for with some form of car finance deal. This is despite the fact that April 2019 saw a slight fall in new business compared to last year. There were just over 76,000 new cars financed in April this year, 7% fewer than April 2018. The total value of financed cars also fell by 2% compared to the same month last year, although it was still higher than £1.6 billion.
The new car finance market has been relatively stable over the last year, however. The total number of cars financed in the 12 months to April 2019 fell by 2% compared to the previous year, although the total value of vehicles financed increased by 1%. A total of 948,000 vehicles have been financed in the UK in the last year, with a total value of over £19 billion.
In a separate report from Close Brothers Motor Finance, it was revealed that more and more people are considering using finance to purchase their next vehicle. The ‘Britain Under the Bonnet’ report found that 43% of drivers will choose either finance, leasing or renting for their next car, a 15% jump compared to last year.
The study found that young drivers in particular are driving this trend. 60% of drivers under the age of 25 said they will use car finance, leasing or renting for their next vehicle, while just 28% of drivers aged over 55 said the same. 48% of young drivers said they will use car finance in order to get the model of car they want, while 20% said they will use it in order to better manage their finances.
“The question on everyone’s minds in the automotive world is how to manage the shift from car ownership to usership, from owning to leasing,” said Seán Kemple, director of sales at Close Brothers Motor Finance. “We’re now living in a world of monthly subscriptions from mobile phones to food boxes, meaning we can chop and change at the drop of a hat and only pay for what we use. This is now the norm for a whole generation coming through the market who are used to being able to upgrade and adapt to suit their needs, and the motor industry is by no means exempt.
“Looking into the crystal ball of motor finance, changes are on the horizon that could well be part of the solution to the current industry problems. The challenge is that while this horizon may seem a long way off, it isn’t. We are potentially talking about a very different world of how we use and pay for cars, with some estimates as early as 2030. Dealers must keep a close eye on the latest developments in this field, as customers will rely on them as a source of knowledge.”