The Decade-Long Surge in Car Finance Agreements

2nd of February 2024

In the past decade, the world of car finance has witnessed an extraordinary transformation, reshaping the way people purchase vehicles. With a blend of convenience, flexibility, and accessibility, car finance agreements have surged in popularity. In this article, we'll delve into the reasons behind this remarkable growth, explore key statistics, and shed light on the future of car finance.

Over the past ten years, the automotive industry has experienced a revolution in the way cars are financed. Car finance agreements have become a cornerstone of vehicle ownership, providing individuals with more options and flexibility than ever before. This article uncovers the driving forces behind this growth, using research and statistics to navigate the evolving landscape of car finance.

 

The Rise of Car Finance Agreements

The journey begins with understanding the surge in car finance agreements. According to data from the Finance & Leasing Association (FLA), car finance agreements in the UK have grown steadily over the past decade. In 2011, there were approximately 1.2 million agreements, a number that has more than doubled to over 2.5 million by 2021. This remarkable rise underscores the changing preferences of consumers when it comes to acquiring vehicles.

 

Factors Driving the Growth

Several factors have contributed to the growth of car finance agreements. Firstly, the increasing cost of new vehicles has pushed more consumers towards financing options. With the average price of a new car on the rise, the affordability of monthly payments offered by finance agreements has become an attractive proposition.

Secondly, the shift towards personal contract purchase (PCP) agreements has played a pivotal role. PCP offers lower monthly payments and the flexibility to change cars regularly, aligning with changing consumer preferences for newer models and the latest technology.

Moreover, the digital revolution has simplified the application and approval process. Online platforms and digital tools have made it easier for consumers to explore financing options, compare deals, and apply for agreements, all from the comfort of their homes.

 

The Role of Low-Interest Rates 

The era of historically low-interest rates has further fueled the growth of car finance agreements. In response to the global economic landscape, central banks have maintained low-interest rates, making borrowing cheaper. This has translated into more affordable finance deals for consumers, making car ownership an accessible goal for a broader demographic.

 

Sustainability and Electric Vehicles 

The push for sustainability has also influenced the car finance landscape. With a growing focus on eco-friendly alternatives, electric vehicles (EVs) have gained prominence. Many car finance agreements now offer options for financing EVs, enticing environmentally conscious consumers with competitive terms and lower running costs.

 

Future Outlook 

As we look ahead, the future of car finance appears promising. With continued innovation in digital processes, increased awareness of financing options, and a focus on sustainability, car finance agreements are likely to remain a popular choice for vehicle acquisition.

If you are part of this surge, and have taken a car out on finance over the last 10-15 years, please reach out. You could be owed serious compensation: If you’d like to read more about this please check out our other blogs or get in touch for a free, no-obligatory assessment.

 

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