Car finance applications provide timely fillip for motor traders

Strong car finance application figures and a surge in people searching for deals online has given motor traders a boost as the new ‘70’ plate launches, according to Experian.

Applications for both Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements have been markedly higher than during the same period in 2019 since showrooms reopened on June 1.

Pent up demand led to an 18.6% increase in car finance applications in the first three weeks of August, following a bumper July when applications were 27.7% ahead of 2019’s figures.

Vehicles sold from September will bear the new ‘70’ plate, making it a critical month for motor traders who need to make up for time lost during the enforced closures due to the Covid-19 pandemic.

Experian’s figures show 390,000 fewer applications for car finance have been made in 2020 compared to last year at the time showrooms reopened in June. However, trading since has cut the deficit to 234,000.

Activity on Experian’s Marketplace, where people can compare car finance deals and check their likelihood of being accepted, provides encouraging signs for motor traders. Searches have increased by 291% since the lockdown began, suggesting many people are looking for ways to finance a car purchase in the coming weeks.

Gerardo Montoya, Managing Director of Automotive at Experian, said: “Motor traders have been working hard to recover from the lockdown period when showrooms closed, and sales reduced to a fraction of normal levels.

“Our figures show car finance applications have picked up markedly since customers returned to forecourts in June. Demand has come from people whose income has not been affected by the pandemic and have money in their pockets, as well as those who are uncomfortable using public transport.

“September’s plate change offers a chance for motor traders to recover more of the sales they missed out on during lockdown. There’s been a surge in people searching for car finance on price comparison websites which suggests forecourts could be busy. Motor traders will rely on data to understand people’s financial situations and how they may have been affected by coronavirus, so the finance deals they offer are affordable for the long term.”