THE number of used cars sold on finance rose for the fourth consecutive month according to the FLA.
While new figures published today by the Finance & Leasing Association reveal that used car finance increased, the numbers of new cars sold on finance dropped.
Used cars sold on finance rose by 7 per cent in value and 11 per cent in volume compared to October 2009, while new cars dropped 11 per cent.
The FLA say that this rise is due to a shortage of used cars after the ending of the Government’s scrappage scheme and the 15 per cent VAT rate. Consumers have turned to the use car market when replacing their cars.
However, the percentage of private new cars bought using dealer finance exceeded the 50 per cent level for the first time since July 2009.
Meanwhile the number of new cars bought on finance by businesses fell by 11 per cent, and the business used car finance market reported volumes down by 34 per cent over the same period.
Paul Harrison, head of motor finance, said: ‘The continued revival of the used car market reflects a return to ‘traditional’ buying habits as buyers look to manage their budgets by seeking out affordable cars and finance.
‘Until recently there was a shortage of popular models of used cars and this drove up the price. The end of the scrappage scheme has led to a rebalance of supply and demand.
‘But motor lenders’ Christmas cheer will be tempered by the prospect of a tough market in the New Year, as the VAT rise takes effect and public sector spending cuts impact on people’s pockets.’