The consumer new car finance deals agreed in August were worth more than £1bn,

The UK consumer car finance market grew slightly in August despite a decline in the overall new car market, according to new figures. Data from the Finance and Leasing Association (FLA) showed a small increase in the number of cars acquired by private customers using finance deals.

Over the course of the month, private consumers agreed finance deals on almost 178,000 cars, up one percent on the same month in 2019. In total, FLA members dished out more than £2.7 billion in advances – an increase of eight percent on August last year.

The lion’s share of the growth was found in the used car market, where private customers acquired some 128,126 cars on finance last month. That’s a two-percent increase on the same period in 2019, but the value of those deals shot up by a massive 10 percent. As a result, the total value of advances came to £1.67 billion.

The new car market saw more modest results, with the number of cars acquired on finance fell by one percent to just over 49,500. That is, perhaps, no surprise given figures from the Society of Motor Manufacturers and Traders (SMMT) showed a drop in new car sales of almost six percent during August.

More surprising, though, is that the value of advances still rose by five percent to hit £1.04 billion, despite the doom and gloom surrounding the market. But figures also show finance deals have accounted for around 93.5 percent of new car sales in the past 12 months.

New cars in car dealership showroom

But with the impact of coronavirus, the lockdown and the current economic uncertainty shrouding the country and the car industry, the finance market has still taken a hit. The 12 months to the end of August has seen a 12-percent drop in the number of cars acquired on finance by private customers, and an 18-percent drop in the value of advances for those vehicles. The used car market hasn’t been hit quite as hard, but the market overall is still noticeably behind the figures seen over the previous 12 months.

Vauxhall dealership forecourt London

“It is encouraging to see further growth in the consumer car finance market, which shows the underlying strength of the market despite the disruption caused by the Covid-19 crisis,” said Geraldine Kilkelly, head of research and chief economist at the FLA. “However, the near-term outlook for demand and employment is highly uncertain as new restrictions are imposed to deal with the ongoing crisis.

“It is more vital than ever that the government and Bank of England support all lenders, including non-banks, by removing obstacles that still exist around access to funding. This will ensure that the motor finance industry is able to meet the ongoing demand for forbearance and new credit.”

Men viewing car loan finance application on laptop