NEW figures released today by the Finance & Leasing Association show that new business in the point-of-sale consumer new car finance market grew 15 per cent by value and 10 per cent by volume in May, compared with the same month in 2017.
The percentage of private new car sales financed by FLA members through the point of sale (POS) was 89.3 per cent in the 12 months to May 2018, which was unchanged compared with the same period to April 2018. The POS consumer used car finance market also reported new business growth in May 2018 of 12 per cent by value and nine per cent by volume.
Geraldine Kilkelly, pictured, head of research and chief economist at the FLA, said: ‘Monthly falls in new business volumes reported in the first three months of 2018 have been followed by a recovery in April and May, in line with demand for new car purchases.
‘The POS consumer car finance market reported new business volumes overall up by four per cent in the first five months of 2018, consistent with expectations for the year as a whole.’
Commenting on the figures, AA Cars chief executive James Fairclough said: ‘Such a solid increase in the uptake of car finance is as much about people’s improving confidence as about the current rock-bottom interest rates.
‘With average wages finally outpacing inflation, car buyers’ disposable incomes are creeping up each month and slowly making new cars more affordable.
‘Added to this, the sense that the current low interest rates can’t last forever could also be nudging some would-be buyers to take the plunge while finance is so cheap.
‘In the current environment, many buyers are taking the opportunity to upgrade by using finance to spread the cost of a new or nearly new car rather than raiding their savings to buy one outright.
‘Although it sounds like good housekeeping to buy a car with savings, it may not always be best practice to spend your nest egg on a car, as doing so could leave you out of pocket in the event of financial difficulty.
‘Car finance gives drivers the option to pay for their car in manageable instalments. Some options, such as PCPs, also give people the flexibility to keep up with the latest motoring technology by upgrading their car every couple of years and help with their monthly budgeting.’
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