UK: more than half of new cars bought on forecourt finance in 2010 image

More people chose to buy a new car using finance through a car dealer than any other finance option in 2010. 52.1% of new cars bought last year were bought using dealer motor finance, according to the latest statistics from the Finance & Leasing Association, the trade body for the motor finance industry.

Dealer motor finance grew in popularity during 2010 compared to 2009, when only 45.8% of new cars were bought using dealer finance.

In 2010, half a million people used dealer finance to buy a new car, and motor lenders provided £6.4 billion of funds. In the used car market, motor finance helped 635,000 people to buy a car, with £5.9 billion in advances.

Commenting on December’s motor finance figures, Paul Harrison, Head of Motor Finance, said:

“Overall, the number of cars financed last year was up by 4% across all markets as buyers took advantage of the competitive deals on offer. However, while dealers had a good year in 2010, they are cautious about the future. We had previously forecast that the VAT rise in January might lead to a rush of sales in December, as consumers tried to beat the rise, as it did ahead of the VAT increase in January 2009.

“However, this did not happen. Consumer confidence is at its lowest for around two years, and this is reflected in December’s figures, which showed a fall in the total number of new cars bought using dealer finance, while used car sales were flat.”

Table 1: Cars bought on finance by consumers through dealerships

Dec 2010 % change on prev. year Q4 2010 % change on prev. year 2010 % change on prev. year
New cars
Value of advances (£m) 456 -15 1,436 -11 6,399 +11
Number of cars 32,022 -25 108,565 -15 499,143 +7
Used cars
Value of advances (£m) 375 +1 1,343 +7 5,910 +8
Number of cars 37,549 0 142,375 +9 634,956 +4

Table 2: Cars bought on finance by businesses

Dec 2010 % change on prev. year Q4 2010 % change on prev. year 2010 % change on prev. year
New cars
Number of cars 26,875 +7 88,976 -1 387,451 +1
Used cars
Number of cars 3,676 -30 8,732 -27 45,489 -3