THE majority of the UK’s largest motor finance brokers are seeing a faster rate of growth in used car finance applications than in new, according to the latest Paragon Car Finance Headlight Survey.
During the first half of 2016, 62 per cent of the 30 brokers surveyed reported growth in used car finance applications compared with 48 per cent highlighting growth in new. In addition, whilst 38 per cent of brokers pointed to ‘a lot more’ growth in the used car finance market over the last six months, only 10 per cent of brokers reported such fast-paced growth for new cars.
Looking forward to the second half of the year, brokers expect that used car finance will continue to perform well, with 43 per cent expecting to see more growth in used car finance applications compared with 33 per cent of brokers forecasting growth in new car finance.
Brokers are also enthusiastic about the long term prospects for used car finance growth, with four out of ten (38 per cent) anticipating that used car finance will grow faster than new cars over the next five years. In contrast, only one in ten (10 per cent) expect new car finance to spearhead growth.
Almost all brokers point to low interest rates (94 per cent), improved vehicle supply (88 per cent) and widespread adoption of monthly payment models (82 per cent) as the main factors driving used car finance development.
Also important is the growing availability of PCP plans for used car finance (77 per cent), better access to car finance online (77 per cent) and an increasing desire amongst used car customers to change their vehicle more frequently (65 per cent).
Julian Rance, head of Paragon Car Finance, pictured, said: ‘As new car registrations start to plateau in the UK, the overwhelming message from the broker community is that used car finance is set to grow at a faster rate than new for the foreseeable future.
‘Dealers looking to expand used car sales will need to make sure they have an attractive suite of finance products on offer.’
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