Product Innovation Contributes to an Increase in Used Car Sales Using Finance

LONDON – Sept 15, 2011: In the past 12 months, the use of Personal Contract Purchase (PCP) deals to buy used cars has increased by 17%, compared with the same period last year. The latest industry figures from the Finance & Leasing Association show that dealers and finance companies continue to innovate to attract customers of used, as well as new cars.

A breakdown of the financial products used by private purchasers of used cars shows that hire purchase remains the most popular, accounting for 65% of finance on used cars. PCP accounted for 20% of used car finance. Personal loans from car dealers were the other main source of finance.

In July, the total number of sales of used cars on finance was up by 4% compared with July 2010, reflecting the overall trend for the year.

In the new car market in July, 6% more cars were sold on finance than in July 2010. This follows last month’s 4% fall, and shows the continued volatility of the new car finance market. However, the overall trend is upwards, and in the last 12 months, 57.6% of all new cars purchased by consumers were sold on a dealer finance package – up from 47% in the previous 12-month period.

Commenting on July’s motor finance figures, Paul Harrison, Head of Motor Finance at the Finance & Leasing Association, said:

“Dealers and finance companies are using innovative products and incentives to provide consumers with good deals. Customers are increasingly drawn to the lower prices of the used car market and are seeking finance that is affordable and flexible enough to fit their budgets, while still allowing them to buy the car of their choice.”