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Half Private New Car Purchases on Dealer Finance

Fri, 15 Aug 2008
Latest statistics from the Finance and Leasing Association show that in the year to June 2008, 50 per cent of all new car purchases were bought using point-of-sale (dealer) motor finance. This is up from 46.2 per cent a year ago.

Dealer finance continues to be an attractive option for car buyers as consumers find it more difficult to get credit elsewhere. Finance agreements are usually secured against the car, which enables specialist motor finance providers to offer more flexible terms and a wider range of products in showrooms to help consumers cope with current conditions.

Many buyers opt for traditional hire purchase, but FLA figures show that bothleasing and Personal Contract Purchase (PCP) have also proved very popular over the past 12 months - up by 27% and 18% respectively over this period.

People who are thinking of buying a new car in September - when the '58' plate is released - should make sure they consider the competitive finance packages available via their local dealerships. The FLA's website provides a useful guide to car buyers on the different finance options available to them, and there is even a 'finance decider' tool to advise people on which product best suits their personal circumstances.

Leasing, or personal contract hire: You agree with the dealer a fixed monthly payment over an agreed period. Your payment will generally include service and maintenance over the period. You pay the agreed rental each month to the dealer (or more likely his finance company). At the end of the agreement, you hand the car back - there is nothing else to pay and the contract is terminated.

Personal contract purchase (PCP): You agree with the dealer the amount you need to borrow (less any deposit/part-exchange). You make reduced monthly payments to the dealer (or the dealer's finance company). At the end of the agreed period, you have the option to: make the balloon payment needed to own the car outright; hand the car back to the dealer; trade the car in against another car and use some of the money raised to pay the amount outstanding on the car

Hire purchase: You agree with the dealer how much you need to borrow (the purchase price, less any deposit or part exchange). The dealer's finance company will then buy the car on your behalf. You make repayments, usually monthly for a fixed period until the loan is paid off. Ownership of the car passes to you once you have made the final payment.

FLA is the leading trade association for the asset, consumer and motor finance sectors in the UK. In 2007 FLA members did £94.5 billion of new business. £28.8 billion was provided to the business sector and UK public services, representing almost 28% of all fixed capital investment in the UK last year (excluding real property and own-account software). The remaining £65.7 billion was provided to the consumer sector, representing almost 30% of all unsecured lending in the UK in 2007. FLA members provided £19.0 billion of motor finance in 2007 and financed more than 50% of all new car registrations in the UK.


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Amount to borrow
Sorry. The minimum loan amount is £1000
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Best available rate 9.20%

Total repayment £8,930.17

Total cost of credit £1,430.17


48 monthly payments

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Representative example

Borrowing £7,500 over 4 years with a representative APR of 25.4%, an annual interest rate of 25.4% (Fixed) and a deposit of £0.00, the amount payable would be £239.77 per month, with a total cost of credit of £4,008.96 and a total amount payable of £11,508.96.

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