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Interest rate rises fail to dampen new car sales

More people in the UK could use car finance deals to buy a new motor this year, research suggests.

The AA has found rising new car registrations in the last year with increasing interest rates failing to impact on consumer confidence.

Despite rising fuel prices and new road user charges, 33% of those questioned revealed that they plan to buy a new car in the coming 12 months.

In particular, people over 55 are driving the market for new cars - with 52% planning on maybe using car finance to buy a new motor in the next year. This compares to just 20% of those aged between 25 and 35.

‘As interest rates rise, UK consumers are beginning to tighten their purse strings. But our research shows strong consumer demand for new registration cars ahead of September 1,’ said Lloyd East, head of AA Personal Loans.

‘Approximately one in three people buying a car in the next year will take out a loan or finance to fund their purchase. With interest rates rising, the cost of buying a car on finance is increasing and it is therefore essential that people intending to buy a new or used car shop around for the best deal before heading for the forecourt.’

Separate figures from the AA showed that average car insurance premiums in the UK rose to £822 in the second quarter of the year.

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