Cars are a necessity, and the need to have them will never go away. Cars have changed the lives of people for the better, and there is no denying that. So much so, in fact, that car financing companies have stepped in to provide 0 deposit car finance to anyone who is looking to buy their dream car.
However, the UK car finance industry has seen a lot of ups and downs in the last decade. In this article, we will look at some of the most recent changes – causes and effects of the pandemic – and how the industry has been making a comeback. So put on your seatbelts, and let us take you on this ride to show you just how resilient this industry truly is!
How Many Cars Are Purchased on Finance
Car finance is available for both new and used vehicles, so what do we use the majority of auto loans for? Surprisingly, the numbers of new and used cars bought on credit are about comparable. The difference between the two is the amount of money people are borrowing for new cars, which is higher. In April 2021, nearly 20,000 cars were purchased using credit in the United Kingdom. There were 76,000 new cars and 134,000 used cars among them.
In comparison to the same period of the previous year, the number of cars purchased on credit has decreased by 2%. Used car finance purchases, on the other hand, are 1% up, compared to a 7% drop in new car loan purchases. Despite the difference in the number of cars, the worth of advancements in the two categories is nearly comparable. This indicates that, while purchasing fewer new automobiles on credit, people are borrowing more and more to do so.
The Shifts In The Industry Through The Years
At the beginning of 2010, the car industry was in tumult. The global financial crisis had caused major firms to collapse, car sales were declining, and China was best known for making copycat knock-offs.
The results for the finance industry for the year 2019 ending in September didn’t look so great. The number of automobiles financed by private customers was down by 22% from the previous 12-month period, owing in part to the Coronavirus epidemic, while the value of advances on those vehicles is down 18%.
In the meantime, the used car loan sector is doing marginally better than the new car market, with the September numbers showing a 9% increase in the number of vehicles financed by private customers. In the ninth month of 2020, the value of advances on those automobiles is also higher from September 2019, with the market valued at £1.85 billion.
It’s no wonder that the consumer car finance market grew in September 2020, reaching a total value of £4.75 billion. Financiers had loaned more than £32.4 billion to individual buyers of new and used vehicles in the 12 months leading up to the end of September.
How Did the Pandemic Affect the Car Finance Industry?
Following the removal of the first lockdown restrictions in June, the Finance and Leasing Association (FLA) figures show that the consumer motor finance industry has played a vital part in the UK’s economic recovery. When the UK entered a period of national lockdowns, it was critical that the government and the Bank of England provide direct access to funding to all lenders, including non-banks.
In May, new business volumes surged 514 percent year over year in the new automobile loan market, while new business value increased 555 percent. New business volumes in this market were 32% higher in the first five months of 2021 than in the same period of 2020.
New business volumes were 37 percent higher in the first five months of 2021 than in the same period in 2020. However, figures from last year were obviously significantly impacted by the pandemic and subsequent lockdowns.
According to FLA Chairman Richard Jones, “If the last 16 months have taught us anything, it’s that productivity now rests on agility. The restrictions of lockdown increased digital adoption by an estimated ten years – that fact alone is a solid basis for a more fluid and imaginative approach to developing new business and managing internal procedures.”
Conclusion
The economic downturn of 2008, while it may have given the industry a shaky start to the last decade, had nothing on the unmitigated disaster that was 2020. We have discussed it here, but the sheer horror of the pandemic and lockdown culture bears repeating. It is simply a point in time we will look back on and feel glad about surviving. And with us, so will the car finance industry.
The UK car financing scene has witnessed innumerable ups and downs through the years, especially recently. That they have survived and are making a strong comeback is a testament to not only the industry, but to the people in general. Their undying optimism in the fact that they will buy a car and also pay off any loans is what keeps the industry afloat, and is likely to do so for years to come.
