Showroom share of car purchase finance rose to a two-year high of 55.7% in the 12 months to May, but dealers are being urged to take note of a shift in buyers’ priorities.
According to the Finance & Leasing Association retail car owners increasingly favour affordability over car ownership.
FLA data shows new car leasing is up 41% year-on-year and personal contract purchase (PCP) was 10% higher (between them they account for 70% of point-of-sale finance). Meanwhile hire purchase slumped by 31%.
Paul Harrison, FLA head of motor finance, said: “The most popular dealer finance options involve renting the car for the duration of the contract, and at the end whether to buy it, trade it in, or hand it back to the dealer.”
Harrison said economic conditions also meant many people were choosing shorter-term contracts to help them keep greater control of their budgets.
Showroom loans for 38,174 new cars sold in May were worth £505 million, 2% up year-on-year.
Advances in the three months to May were static at £2.116 billion, even though the volume of sales was 4% lower.
Loans for the 12 months to May totalled £6.36bn: this was 1% higher based on 485,942 sales.
Over the same period for used cars point of sale loans totalled £5.914bn for 632,028 units – both were 4% higher than in 2010.