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New Car Finance Market Growth Surge Expected in 2025
The UK’s new car finance market is poised for significant growth, with projections indicating an 8% increase in 2025. According to the Finance & Leasing Association (FLA), this uptick stems from a boost in consumer confidence, primarily influenced by lower interest rates.
Understanding Consumer Confidence's Role
Geraldine Kilkelly, the director of research and chief economist at the FLA, remarked on the positive outlook for consumers, highlighting the latest research that points to a 6% growth in overall consumer car finance, with new cars leading the charge. Evidence suggests that the easing of interest rates is encouraging buyers to explore financing options, thereby invigorating the market.
Recent Trends in Car Finance Volumes
Data from July reveals encouraging trends, with new car finance volumes rising by 1% compared to last year. This increase, alongside a 4% rise in value, showcases the public’s willingness to invest in new vehicles. Specifically, the value of new business was 2% higher in July 2025 than the same month in 2024, reinforcing the trend towards higher car purchases.
Implications for Used Car Finance
While the new car market is experiencing substantial growth, the used car finance market is also contributing to the overall landscape. Although it is projected to grow at a slower rate of 4%, indicators show a strong value increase of 6% in July 2025. The continued interest in finance options for used vehicles reflects a broader commitment to accessing reliable transportation.
Looking Ahead: What This Means for Consumers
As the finance market expands, consumers are encouraged to evaluate their options carefully. With lower interest rates, now might be the perfect time to consider financing for a new car. Understanding the dynamics of the finance market will empower buyers to make informed decisions on their next vehicle purchase, whether new or used.
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