LONDON May 12 The proportion of cars being
bought in Britain on credit is rising, according to data
released on Friday, as a regulator begins a review into how
finance plans are sold due to fears of irresponsible lending.
In the 12 months to March, 86.5 percent of new private cars
were bought by consumers using finance supplied by members of
the Finance and Leasing Association (FLA), up from 82.7 percent
in the same period in 2016, the industry group said.
The total value of consumer car finance provided in March
rose by an annual 13 percent to a record 3.6 billion pounds
($4.6 billion), as buyers brought forward sales to avoid a tax
hike which came into effect on April 1.
Since Britain began recovering from the global financial
crisis at the start of the decade, most sales have been made
using personal contract plans (PCP), where a buyer puts down a
deposit and then rents the vehicle for two to three years.
At the end of the period they have to decide whether to buy
the car outright or switch to a new model and continue making
monthly payments, helping to propel car sales to record levels
in 2015 and 2016.
Last month, Britain's Financial Conduct Authority said it
will conduct a review into motor finance, warning there may be a
"lack of transparency, potential conflicts of interest and
The total number of new cars sold using finance rose 4
percent to 1.05 million vehicles with an 8 percent increase in
used car sales on credit to 1.27 million.
The FLA's Head of Research and Chief Economist Geraldine
Kilkelly said the level of new car finance in the first quarter
was in line with the industry's expectations.
A plunge in sales of diesel cars in recent months because of
anti-pollution levies could, however, put the lucrative credit
model at risk by driving down the value of used vehicles which
are sold second-hand.
($1 = 0.7766 pounds)
(Reporting by Costas Pitas; Editing by Elaine Hardcastle)