1 Million New Cars Worth £16.2 Billion Bought On Finance In 2015
Drivers increasingly relying on new car finance which increase the risk for second-hand buyers.
Average new car bought on finance worth £16,500
Nearly 1 million, UK, privately purchased new cars were funded via finance throughout 2015 which was 10% higher than 2014, Finance & Leasing Association figures claim. The total value of these vehicles reached £16.2 billion which – based on a precise sales figure of 984,077 – equated to an average cost of close to £16,500.
Further, in 2015 the percentage of new cars privately purchased on finance increased to 81.4%, compared to 75.9% in 2014. Business took its share of finance too. In the year to December 2015, 508,527 new cars were purchased in this manner which was a 6% rise.
Used car finance
Privately purchased used finance sales totalled 1,147,387 cars in 2015 (+9%). The “value of advances” - how much money was loaned, in other words – hit £12.1 billion. In contrast, business purchased 39,001 used cars on finance in the year ending December 2015 (-7%).
Another record year for finance market
Geraldine Kilkelly, Finance & Leasing Association Head of Research and Chief Economist, said: “It was another record year for the point-of-sale consumer car finance market. While growth in 2015 remained robust, it was slower than in 2014 and in line with expectations.”
Ms Kilkelly emphasised that the finance market remained strong to the end of the year. In December 2015, for example, private buyers financed 67,667 new vehicles which was 22% more than December 2014.
She continued: “The strength of the market in December reflects strong consumer confidence buoyed by low inflation, interest rates and unemployment. The FLA’s latest retail motor finance confidence survey suggests that we will see new business growth in 2016 of up to 10%.”
Increased risk for second-hand buyers
The rise of finance increases risk for second-hand buyers. A loan, after all, should be cleared prior to sale or a new owner – or to be precise the person who thinks they now own the vehicle – could have it reposed without compensation by the original loan provider.
My Car Check is among the companies that provides pre-sale checks to ensure vehicles are clear of any finance. Its Head, Robert Powell, explained: “These new figures illustrate the changing nature of used car buying particularly in the private marketplace.“
He continued: “The popularity of personal contract purchase finance has increased the risk of buying a second-hand car with thousands of pounds of debt attached to it.”
Picking the wrong vehicle can be very costly, of course. Mr Powell explained that the average used retail value of cars has risen by £758 in the last 12 months, from £7,072 in January 2015 to £7,830.