Rise in car loans reveals resilient demand
Automotive lender CarMoney reported an 18% year-on-year increase in car loans written in December.
It says this points to pent-up demand and suggests the industry remains resilient.
Despite high interest rates and pressure on household budgets, it states that car ownership remains a necessity for many with 7.8 million used car transactions during 2025.
However, supply constraints continue to impact the sector with a shortfall of around 1.8 million three to five-year-old cars compared with 2019. This means competition for stock remains intense, with independent dealers growing their share of one to five-year-old cars at the expense of franchised retailers.
Used car sales are now expected to rise a further three per cent to around eight million transactions this year.
Alistair Grier, CEO of CarMoney, said: “What we saw in December was a clear spike in demand following the Budget. It underlines the level of latent demand in the market. Even with ongoing economic pressures, the signals we are seeing suggest a positive start to 2026 for dealers.
“But the message for the trade is clear. The market is not immune to economic pressure, but demand remains resilient, particularly at the affordable end, and the year has begun with cautious but genuine momentum.”
