More car buyers are turning to dealerships for finance03/03/2017
Car finance at the point of sale is becoming increasingly popular with car buyers. The market grew 12% by value to £31.6 billion and 8% by volume last year, new official figures show, with Personal Contract Hire products showing especially strong growth.
New car finance provided by dealerships was 12% up by value at £18.1 billion and 6% up by volume in 2016, reports the Finance & Leasing Association. The total number of new cars financed in this way totalled 1,045,144, as the percentage of new cars bought by consumers and financed by dealerships increased to 86.6% of the total retail new car market, from 81.4% in 2015. In other words, nearly nine out of ten new cars bought by consumers are now secured with some type of finance package.
Personal Contract Purchase is by far the most popular new car finance method, accounting for 82% of total market value last year (it was 81% in 2015). Hire Purchase captured 9% of the market (down from 12% last year), and could be overtaken this year by Personal Contract Hire which increased its share from 7% to 8%. The total value of Hire Purchase business fell by 15% to £1.6 billion as PCH grew by 42% to £1.5 billion. Very few buyers now use personal loans to finance new cars, and this method has dwindled to less than 1% of the sector.
In the used car market, finance provided by dealerships was 12% up by value at £13.5 billion compared to 2015, and 9% up by volume with a total of 1,253,706 used cars financed.
“The point of sale consumer car finance market reported another record year in 2016, with total new business volumes reaching 2.3 million cars,” the FLA’s Head of Research and Chief Economist Geraldine Kilkelly said, adding: “Our latest confidence survey suggests broadly stable new business volumes in 2017.”