The motor trade industry is benefiting from credit schemes that are allowing motorists to borrow in order to purchase vehicles, research has revealed.
According to new figures from Black Horse, part of Lloyds Banking Group, 83 per cent of cars in the UK are currently bought ‘on finance’. Furthermore, six in 10 car buyers have borrowed as much as the total value of the vehicle to complete the transaction.
The figures are indicative of the economic recovery and subsequent return of confidence among consumers to buy on credit. As the automotive industry booms because of these factors, it is important that companies keep an eye on their motor trade insurance policy; any fluctuation in business activity, such as an increase in the number of vehicles being brought on to the premises for sale, must be reflected in a trader’s insurance policy to ensure they are comprehensively covered should they encounter incidents that need to be claimed on.
Prior to the recession, around half of cars were bought through finance deals or credit. In the first eight months of 2013, this figure was up to 75 per cent and now is eight per cent higher still. Meanwhile, car sales in total are up 12.5 per cent in the first four months of 2014 compared to the same period a year ago – the two are clearly connected, with credit schemes fuelling the industry’s growth.
Despite the positive news coming from Black Horse, the Financial Times voices concerns that buying on credit could undermine the sustainability of the market’s rise if interest rates also begin to increase.