More using finance for car purchase

14/10/11

By Leo Stevens

Around 17 per cent more motorists used finance to buy a new car this year than they did in 2010, a report has revealed.

According to the Finance & Leasing Association (FLA), there was also an 8 per cent rise in used cars purchased with finance in August, compared with 12 months ago.

Using credit to buy a new or used vehicle gives motorists the flexibility at a time when other motoring costs, including fuel, car insurance, tax and breakdown cover can be considerable, according to Paul Harrison, the FLA's head of motor finance.

During the 12 months to August 2011, 57.9 per cent of car buyers used forecourt finance, which is this payment method's biggest share in the new car sales market in four years.

The number of motorists leasing vehicles rose by 38 per cent during the year, while instances where motorists used the personal contract purchase (PCP) method increased by 24 per cent. A similar trend was observed in the used-car market.

Mr Harrison said: "Motor finance has an edge over other purchasing options in current economic conditions as customers are able to negotiate a finance package to suit their budget, whether it is a leasing, PCP, hire purchase or a loan agreement."