News
More than 250,000 use forecourt finance for car purchases this year
In the first six months of 2010, more people used dealer finance than personal loans or savings to make a new car purchase. New figures show that 264,377 people used forecourt finance to buy a new car, which was 49.4% of all new cars sold to consumers. The number of new cars bought on finance was up 26% in the first half of 2010.
According to the Finance & Leasing Association, 57% of dealer finance by value was provided through a Personal Contract Purchase (PCP) deal. These deals have become increasingly popular in the recession because of the flexibility offered to customers (1). Dealers can tailor repayment terms to their customers’ budget and the customer has a choice at the end of the contract on whether to hand the car back, buy it outright or use any equity as a deposit towards their next deal.
Business purchases of new cars were also up, by 15% in Q2 2010 compared with Q2 2009. Businesses have begun to replace old fleets, whose useful life had been extended because of the recession.
Commenting on June’s motor finance figures, Paul Harrison, Head of Motor Finance, said:
“The first half of 2010 has been very positive for dealer finance. We do expect consumer demand to reduce in the next few months but November and December is likely to see a pick up in demand as customers rush to buy new cars before the increase in VAT to 20% affects prices.”
Table 1: Cars bought on finance by consumers through dealerships
| Jun 10 | % change | Q2 2010 | % change | 12 months to Jun 2010 | % change | |
| New cars | ||||||
| Value of advances (£m) | 578 | +22 | 1,561 | +21 | 6,520 | +25 |
| Number of cars | 42,600 | +11 | 117,941 | +14 | 519,866 | +24 |
| Used cars | ||||||
| Value of advances (£m) | 514 | +5 | 1,537 | +8 | 5,686 | -1 |
| Number of cars | 55,121 | +0 | 165,945 | +2 | 609,524 | -6 |
Table 2: Cars bought on finance by businesses
| Jun 10 | % change | Q2 2010 | % change | 12 months to Jun 2010 | % change | |
| New cars | ||||||
| Number of cars | 31,055 | +15 | 98,538 | +15 | 373,329 | +4 |
| Used cars | ||||||
| Number of cars | 4,907 | +15 | 13,485 | +13 | 48,753 | -6 |
- ends -
Note to editors:
- Personal contract purchase allows customers to choose what happens at the end of the contract. They can either hand the car back to the dealer, make the value payment agreed on at the start of the contract, or they can trade the car in, and use any proceeds of sale over and above the agreed value of the car on a new deal.
- See www.financingyourcar.org.uk for impartial information on finance options for buying a car.
- The FLA is the leading trade association for the motor finance sector in the UK. FLA members provided £16.5 billion of motor finance in 2009 and financed more than 46% of all new car registrations in the UK in the twelve months to June 2010.
For further media information, please contact:
Helen Saxon, FLA
T: 020 7420 9664 E: helen.saxon@fla.org.uk M: 07918 766 993