Sharp increase in showroom finance

More than 70% of people buying a new car are turning to a showroom seller to finance their purchase, according to new figures.

Better deals are said to be the driving force behind an increase in motorists choosing to lend through a showroom, rather than more traditional methods, with almost £10 billion being borrowed, according to Paul Harrison, head of motor finance at the Finance and Leasing Association.

He said those wanting to take out car finance from a showroom will find a host of competitive deals that suit different needs of the customer, such as hire purchase or a personal contract purchase (PCP).

More than 650,000 new cars were bought on finance in the year from November 2011, which is said by the Financing and Leasing Association(FLA) to be an increase of 34% on the previous year.

The growing popularity of showroom lending and an extra £2 billion laid on by motor finance companies has seen more than 70% of privately bought new vehicles purchased using this method.

However, despite a rise in the number of showroom finance deals, car sales for Honda are instead falling, with 800 staff to be laid off in the coming months.

Hundreds of workers at the Honda factory in Swindon are to lose their jobs after the Japanese company struggled to during the financial crisis.

A sharp decline in Honda sales across Europe is said to be the reason why hundreds of staff were told last week that the factory is being down-sized and why they were asked to take redundancy.

Honda sales across Europe have fallen by at least one million in the last year, with job cuts said to be the first since the company set up in 1992 in the UK.

The company, which employs more than 3,000 workers, has seen sales fall in European countries, such as such as Greece, Spain and Italy, which have been hit the hardest since the economic downturn began in 2008.

Executive vice president of Honda Motor Europe, Ken Keir, said he will have to look at restructuring the business to cope with the current crisis, while a formal 90-day consultation process will take place with workers.

He explained that Honda had no choice but to cut hundreds of jobs by March or April. However, Mr Keir said he would avoid having to make compulsory redundancies.

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