Confidence levels amongst car buyers is “buoyant” with customers replacing financed vehicles more often - and they are willing to pay more each month when arranging finance.

The first Paragon Car Finance ‘Headlight Survey’, tracked the views of the UK’s largest motor finance brokers, and found that 60% of brokers described car buyer confidence as strong or very strong.  

This is reflected in brokers’ optimism about the future, with almost three quarters (74%) expecting to finance more vehicles over the next three months and more than one quarter (26%) expecting to finance about the same amount.

The survey also highlights that finance customers have been replacing their cars more frequently over the last 12 months, with three times as many brokers reporting that the replacement cycle has become shorter (39%) for their customers than those who’ve seen it lengthen (13%).

Overall, brokers report that one in eight finance customers (13%) now replace their cars at least once every two years, almost half (48%) exchange their car every three years and the remaining 39% replace their vehicle every four years.  

Plus, 23% of brokers report that customers are willing to pay a little more each month when arranging finance for a car purchase, painting an encouraging picture of continued steady growth.

For new cars, brokers report that the average deposit (including part exchange) on the majority of finance agreements (54%) is between 11% and 25% of the value of the vehicle.

In contrast, for used cars, the average deposit (including part exchange), is between 1% and 10% of the value of the vehicle for most agreements (46%).

FCA impact

The majority of brokers (57%) report that the FCA switchover has had no impact on business volumes with 35% saying it has, in fact, boosted volumes.

For most, the FCA switchover has not made it more difficult for customers to obtain finance (74%) nor has it limited the variety of products on offer (83%) or made the process of applying for finance more complicated for them as brokers (74%).

However, a significant proportion (70%) agree that it has reduced the number of dealers offering finance and over 61% agree that it has resulted in different commission models that are difficult to understand.

Julian Rance, head of Paragon Car Finance, said: “Active across the UK, brokers have a unique insight into the market and it’s important for lenders to understand their perspective and shape our products accordingly.  

“The level of optimism that brokers are reporting is very positive and a marked demonstration of the strength of the UK car finance market.”

> The Paragon Car Finance Headlight Survey is a new quarterly survey of the UK’s top 30 vehicle finance brokers operating across the UK.  It comprises a wide range of brokers including those who arrange business for car dealers and specialist vehicle retailers as well as brokers who arrange finance with customers directly.