The UK new car finance sector grew by four percent in October as the supply shortages blighting the car market began to ease. That’s according to the latest figures from the Finance and Leasing Association (FLA), which says both private car finance agreements and loan values were up in October.

That result came amid easing supply shortages in the car market, which saw new business increase by two percent compared with October 2021, with almost 55,000 new private cars acquired on finance. And the value of advances of those cars was up by a massive 12 percent, taking the total to well over £1.4 billion.

Men viewing car loan finance application on laptop

At the same time, the used car market also experienced growth, with almost 125,000 used vehicles financed by private customers – an uplift of five percent compared with October last year. And the value of advances for those vehicles was up by an even more substantial seven percent, approaching £1.9 billion.

As a result, new business was up by four percent overall across both markets, with a total of almost 180,000 new and used cars financed. And the value of advances on those cars topped £3.3 billion – an increase of nine percent compared with the same month last year.

Customer signing finance contract with car salesman

Geraldine Kilkelly, the director of research and chief economist at the FLA, said the finance market’s success was in line with general trends in the market.

“In October, the consumer new car finance market reported monthly growth for only the fourth time so far this year, while further growth in the consumer used car finance market reflected the consistently robust performance by this market over the same period,” she said. “The point-of-sale consumer car finance market is expected to report new business volumes in excess of 2.2 million vehicles in 2022 as whole, four percent higher than in 2021, but 10 percent lower than in 2019 as supply shortages continue to weigh on the recovery of the new car market. The gradual easing of these shortages should support new business volumes over the next twelve months despite the pressure on real household incomes.

“As always, customers who are worried about meeting payments should speak to their lender as soon as possible to find a solution.”