Why car finance is growing fast in the UK
1 June 2023
By Joy Pearson
Car finance has become an increasingly popular way for people in the UK to purchase a new or used vehicle, and the trend shows no signs of slowing down. In fact, car finance is growing at an incredible rate, with a 10% -year-on-year increase in car finance deals being reported in 2020. By why is this the case? In today's post, we will explore the reasons behind the rapid growth of car finance across the UK and talk about potential reasons for this consistent increase.
First and foremost, car finance offers consumers greater flexibility and affordability. With the rising cost of living and the increasing pressure of household budgets, many people simply can't afford to pay for a car upfront. Car finance allows them to spread the cost of the vehicle over several years, making it more manageable and accessible.
Furthermore, car finance offers a wide range of different options to suit the individual need and circumstances of the buyer. Whether it's a Hire Purchase (HP), Personal Contract Purchase (PCP), or Leasing, consumers have a choice or repayment plans to suit their budget and preferences. This choice allows buyers to select the option that suits their needs best, making car ownership a possibility for a wider range of people.
Another reason for the growth of car finance in the UK is the competitive rates that are available. Lenders are offering attractive deals and incentives to encourage buyers to choose their finance packages over those of their competitors. This has created a highly competitive market, which is driving down the cost of car finance and making it more accessible to a wider range of consumers.
However, while the growth of car finance in the UK has many advantage, there are also some concerns about the potential risk that comes with it. Some people worry that the affordability of car finance may lead to consumers taking on more debt than they can realistically afford. There is also a concern that the competitive nature of the market may encourage lenders to offer finance to those who may not be able to afford it in the long term.
So, the growth of car finance in the UK can be attributed to a range of factors, including greater affordability, flexibility and competitive rates. However, it is important to consider the potential risks associated with car finance, such as the risk of over-indebtedness. It is therefore important for consumers to research their options carefully and choose a repayment plan that is affordable and suitable for their circumstances.