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July 18.2025

2 Minutes Read

Motor Finance Market Forecast to Grow 7% in 2025: What You Need to Know

Close-up view of cars with finance offer signage, reflecting motor finance market growth 2025.

Motor Finance Market Set for Strong Growth in 2025

The motor finance market is gearing up for a promising year ahead, with new forecasts predicting a growth rate of 7% in 2025. This projection comes from the Finance & Leasing Association (FLA), which highlights an optimistic shift in consumer sentiment driven by expectations of falling interest rates. Such economic climate is likely to bolster both new and used car finance sectors.

Consumer Confidence on the Rise

Geraldine Kilkelly, director of research and chief economist at the FLA, reports that improved consumer confidence is pivotal for this anticipated growth. She noted, "Our latest research suggests that the value of consumer car finance new business in 2025 would grow by 7%, with 7% growth in the new car finance market and 6% in the used car finance market.” This increase in consumer optimism can be attributed to the prospect of further interest rate reductions in the coming months, making loans less expensive and car ownership more attainable.

Market Performance Insights

As we analyze the recent trends, a mixed bag of results offers an insightful perspective. For instance, new business value for consumer new car finance slightly dipped by 1% in May 2025 compared to the previous year. However, when looking at the first five months of 2025, there was a notable 8% rise in new business volumes compared to the same period in 2024. In contrast, the used car finance sector showcased a 3% higher value of new business in May compared to 2024, even as overall volumes faced a slight decline.

The consumer finance landscape appears stable, underscoring resilience in both segments. Kilkelly commented, "Both new and used car finance markets reported a modest 2% decrease in new business volumes this past May, but a steady growth overall by 6% in the initial five months illustrates a healthy demand for car finance options among consumers."

Future Trends and Opportunities

Looking ahead, as interest rates potentially drop, it could create a ripple effect, encouraging more consumers to engage with the finance market. This environment not only spurs vehicular purchases but also aligns with the growing interest in electric vehicles and sustainable practices within the automotive industry. As the car finance market expands, it opens up avenues for innovative financing solutions, catering to the evolving preferences of modern consumers.

In summary, the projected 7% growth of the motor finance market in 2025 reflects a renaissance in consumer confidence and market resilience. As individuals look to make informed car purchasing decisions, understanding these trends will be crucial for both buyers and industry professionals alike.

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Motor Finance Market Forecast to Grow 7% in 2025: What You Need to Know

Motor Finance Market Set for Strong Growth in 2025

Consumer Confidence on the Rise

Market Performance Insights

Future Trends and Opportunities

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