DATA from the FLA shows that the new car finance market saw its largest decline in June since February 2021 as new business volumes dropped by 12% in June 2022 compared with the same month in 2021.
The consumer used car finance market reported new business up 10% by value, but 3% lower by volume in June compared with the same month in 2021. In the first half of 2022, new business volumes in this market were 12% higher than in the same period in 2021.
Michael Davidson, Chief Revenue Officer at Freedom Finance, one of the UK’s leading digital lending marketplaces, said: “The motor market has struggled with severe headwinds since the pandemic with a shortage of semi-conductor chips impacting supply for buyers in the UK and driving up the cost of second-hand cars.
“More recently, the rising cost of living and the soaring cost of petrol may be deterring would-be car buyers from making such a significant purchase.
“Motor finance has a crucial role in enabling more people to buy vehicles by spreading the cost of payments. The market has seen significant innovation to broaden the range of products that are available to customers and there are now more bespoke, flexible options that will suit a customer’s individual circumstances.
“For customers, shopping around is vital to ensure they are getting the right deal for them at a competitive rate. Technologies are improving and marketplaces can now quickly offer a range of products that customers will definitely be eligible for via a single application that does not damage their credit score.
“Many successful car dealerships have also put in place embedded finance partners that can meet their customers’ demands for quick, simple access to a range of different car finance options as well as other financial services, so that their customers can get the best deal at source at any stage of the purchase journey.”
