Number of cars bought on finance 'hits four-year high'

By Joel Stanier

August saw the highest proportion of new cars bought using car loans or other forms of car finance for four years, according to figures from the Finance & Leasing Association (FLA).

That month, 57.9% of new car buyers (not including businesses) made their purchase on finance, amounting to 26,210 purchases in total. That was 17% higher than the same month a year earlier.

Used cars bought on finance showed a more modest increase of 8% on August 2010, with 66,082 vehicles purchased.

The increases included a 38% rise in leasing and a 24% rise in Personal Contract Purchase (PCP) compared with August 2010.

Paul Harrison, Head of Motor Finance at the Finance & Leasing Association, commented: "These figures show that forecourt finance continues to be extremely popular. Motor finance has an edge over other purchasing options in current economic conditions, as customers are able to negotiate a finance package to suit their budget, whether it is a leasing, PCP, hire purchase or a loan agreement."

A car loan expert at Think Money said: "The FLA's figures suggest that car buyers have become a lot more comfortable about making purchases on credit in recent months. This hopefully reflects improvements in their own financial circumstances, although it's likely that increased availability of car loans has also had an impact.

"However, we do urge car buyers to carefully consider how much they can realistically afford when taking out credit. It's simply not worth overstretching your finances, especially in the current climate."

Tags: FLA, Finance and Leasing Association, car finance, car loans, car, cars, new cars

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