New car finance on the rise

The number of motorists choosing to buy new cars on finance rose 42 per cent in July compared with last year.

This is the largest monthly rise of 2012 to date, with the value of these finance deals also growing by 48 per cent.

Over 68 per cent of new cars bought by motorists and car insurance policy holders were purchased on finance.

Paul Harrison, head of motor finance at the Finance and Leasing Association, said in a press statement: "600,000 people used finance from dealers to buy their new cars during the past 12 months, showing that it is a vital source of credit for consumers.

"It lets people access the cars they need to get to work and support their families and lifestyle.

"More than £15bn has been lent by car dealers to consumers in the past year, helping to support the economy. The government should make sure that the specific needs of this important sector are catered for as it continues to review the future regulation of consumer credit."

The rise in finance deals overall in 2012 has been the highest since the FLA's records began.

Personal Contract Purchase, where customers pay a set fee for a specified time, accounted for three fifths of car finance deals in July. Hire purchase accounted for a further 28 per cent of finance arrangements while leasing made up 7 per cent of the figures.

Another 5 per cent of customers opted to use personal loans provided by car dealers to finance the purchase of their new car.

Interested in financing your next car purchase? See how Admiral Car Finance can help, or read our guide to find out everything you need to know about car finance.