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Used car prices drop fuelling car finance

The average cost of second hand cars in the UK fell by 2.4% in the three month period leading to September according to figures from Auto Trader.  This drop in prices appears to be driving up the demand for finance for cars, with growth in the auto loan sector by 11% in September, with more than 66,000 cars bought with £600 million of borrowed money.  Figures were released by the Finance and Leasing Association (FLA) and related to year on year lending.

However figures show that 60% of customers used finance to buy new rather than second hand cars over the past twelve months, with much of the car loans being taken out from dealers at the point of purchase.

“September is a hugely important month for the motor industry as it sees the release of the new number plates. Our figures make encouraging reading for dealers and finance providers in what are still tough trading conditions.” said Paul Harrison, head of motor finance at the Finance & Leasing Association.

Paul Harrison, head of motor finance at the Finance & Leasing Association, said: “September is a hugely important month for the motor industry as it sees the release of the new number plates. Our figures make encouraging reading for dealers and finance providers in what are still tough trading conditions.”

The remaining 40% of used car purchases in the last twelve months may well be due to the average cost of a second hand car dropping from over £9,000 to £8,870.  This is the first time that prices slid below £9,000 since the Auto Trader started tracking the market in January 2010.  Tim Peake, Auto Trader’s Director said: “A lower overall supply of one to three-year-old vehicles entering the UK car market, combined with consumers holding on to their cars for longer, is increasing the average age of vehicles in the UK and this is being reflected in lower average overall prices.”

Used car prices drop fuelling car financeThe BMW 3 Series, the Volkswagen Golf and the Ford Focus were the most desirable vehicles between July and September 2011.  For used cars in the UK visit http://www.netcars.com/.

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