Vehicle finance demand unaffected by inflation
- Posted by: Alan Feldberg
- Category: News
Consumer demand for motor finance remains strong despite the economic uncertainty.
According to the latest data from Auto Trader there were over 1.9 million finance interactions on its platform last month, while the Finance and Leasing Association’s (FLA) reported that second-hand car finance penetration is now at a record 45%.
The reason that motor finance demand is remaining stable is largely due to motor finance propositions being very different from other finance products on the market. Chief among the key differences is that motor finance is much less affected by base rate rises due to the fact consumers are in fixed PCP and HP contracts.
What’s more, existing owners who choose to part-exchange their current car are shielded even further from the higher borrowing costs, with the value serving to reduce the gap of their new finance contract.
Auto Trader’s automotive finance director, Fiona Mackay (pictured), said: “All signs on our marketplace point to the growing importance of finance, especially amongst used car buyers. With average second-hand prices up around 47% on pre-pandemic levels, coupled with the current economic turbulence, finance offers many car buyers a more manageable route to access their next car. Although the vast majority of our retailer partners advertise finance on their adverts, nearly a quarter don’t – with more price conscious consumers searching by monthly payments, a significant, and worrying, number of businesses are at risk of missing out.”