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More Brits than ever using car finance

By raccars Published

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Why did Brits buy a million new vehicles using £16.2 billion in car finance last year?

The Finance and Leasing Association (FLA) has released statistics showing that more Brits than ever are choosing finance deals to buy a new vehicle. Car finance deals in 2015 were up 10 per cent year on year, with 984,077 new cars bought on finance last year, worth about £16.2 billion. However industry analysts are concerned about the risk of bad debt and the associated problems for used car buyers.

Car finance accounts for eight out of ten purchases

The quoted statistics apply only to private car sales, while businesses used finance to buy another half a million vehicles. In December alone finance deals for private cars were up by 22 per cent. Dealerships reported an overall financing rate of 81.4 per cent for 2015, compared to 75.9 per cent in 2014, meaning that about eight out of every ten new cars on the road is not technically owned by the vehicle keeper. Finance rates also grew in the used car market, with 1.15 million buyers choosing finance to buy a used car in 2015.

The FLA expects the growth in car finance to continue in 2016, in line with new car sales volumes. On the other hand, buyers using a car history check when buying used vehicles are finding more and more questions arising.

Nearly half of the car history checks carried out last month revealed at least one dubious issue, up 6 per cent compared to the previous January. Many of these issues had nothing to do with finance and instead related to write-off declarations or a standard registration transfer, for example. However, finance alerts requiring further investigation were up 16 per cent year on year. The FLA also noted that the average value of the cars being history checked rose to £7,380 compared to £7,072 last January, an increase of £758.

RAC Car Passport

The risk to used car buyers is that they will unknowingly purchase a vehicle which is subject to thousands of pounds of finance which has not been discharged. This means that a car history check is more important than ever. The RAC offers the most comprehensive car history check on the market, called the RAC Car Passport. There are two options available; a car buyer's report and a seller's report.

Buyer's report

The car buyer's report includes a thorough investigation into the vehicle's history with a ten point alert for outstanding finance arrangements, plus notification of any theft, write-off or scrappage declarations and any discrepancies in mileage.

The buyer's report offers additional information in the form of a report of common faults and reasons for MOT failure organised by make and model; an independent review by 'What Car?'; a Glass's Guide vehicle valuation; an assessment of average running costs; and a recommended checklist to run through before purchase. The car history data is covered by a £30,000 guarantee.

RAC Loans

With a huge range of options available, financing your car can be daunting. But with an RAC Personal Loan, making that choice is easier than ever – affordable rates (as low as 4.8% APR) and flexible borrowing amounts between £2500 and £25000 make it a simple - and cheap - way to get the money you need for your perfect car.

To qualify, all you need is to be 18, employed, with good credit history and a UK resident for at least a year, and the money could be heading your way by the next working day.

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