Loan Packages Worth Almost £16.2b Taken Out By the British Drivers
80 per cent of new cars are now purchased using finance of some kind, although industry insiders are warning that those who want to buy used vehicles should be aware of the fact that a growing number of second-hand cars may be linked with unpaid debt.
During the previous year, there was a 10% rise in the amount of finance packages that were taken out by vehicle buyers that went hand-in-hand with a 16% boost in the amount of incidences of vehicles being sold with outstanding payments yet to be made of the initial deal. This is as per a separate research done by MyCarCheck, and these must act as a warning to drivers who are considering to invest in second-hand cars.
The most interesting thing about the figure associated with the rise in finance deals offered by FLA is it doesn't take into consideration the commercial industry however rather concentrates on private purchases done by persons searching for vehicle for personal usage. When vehicles registered by businesses that were bought via loan are taken into consideration, the total rises up by 50% percent.
Even if you ignore the business buying habits, customers are still helping to encourage the marketplace. With December of the previous year seeing an increase of around a quarter in the amount of car loan deals being taken out.
As a result, a huge number of new vehicles that hit the road in the United Kingdom every day aren't owned by the drivers out-right however rather subject to loan packages worth billions.
People are also increasingly taking advantage of finances to purchase used cars, with an eight per cent rise in this market over the past 12 months.
Spokesperson of FLA, Geraldine Kilkelly, stated the figures were not as disturbing as they may look, as they reflect the present trend in the UK car market place. Also, she pointed out the rising loan deals were, in fact, slower during the previous year than it had been during the year 2014.
Combination of low inflation & interest rates along with reduced levels of unemployment is assisting to increase customer confidence which has enabled more people to take benefit of loan packages throughout the year and especially during the final months of the year, Kilkelly stated.
At present, FLA is predicting an identical 10% rise in finance adoption this year even though there are concerns that mightlead to the rise in the amount of risks which used car buyers encounter whilst purchasing a car.
Industry professional Roger Powell stated that purchasing a used vehicle as the segment of private arrangement was turning out to be difficult procedure for drivers to negotiate. Particularly he highlighted issues related with personal contract purchase (or PCF) loan package as being applicable in this respect.
The increase in spending and usage of loan for new vehicle deals are having various effects on the used marketplace with an average second hand model value increasing by around £800 during the past year only. Also, the incentives provided by manufacturers & finance firms could mean that individuals are more likely to purchase a new vehicle on a regular basis instead of waiting for extended periods between purchases.