Car buyers purchased 21% fewer new cars and 21% fewer used cars with dealer finance in February 2009 compared with the same month last year, said Finance and Leasing Association (FLA).
Consumer leasing of new cars fell 36% by value compared with February 2008, but personal contract purchase deals were up 3%.
Despite the monthly decline, dealer finance remains the most popular way to fund a new car with 52.9% of customers buying cars on finance in the last 12 months.
Geraldine Kilkelly, head of research and chief economist at the FLA, said: "February's motor finance figures give us further evidence of the need for Government support to boost liquidity in the motor finance market.
“But demand for personal contract purchase deals rose 3%, indicating that consumers are seeking out flexible finance agreements to help them during the economic downturn."