The 29% increase in online car finance applications for Creditplus during the first nine months of 2016 could be partly attributed to consistently low Bank of England rates and increasingly positive post-Brexit stability, according to the car finance provider.
Since the Bank of England cut the base rate to 0.5% in 2009, consumers - particularly mortgage holders on variable rates - have been able to benefit from lower monthly repayments in the seven years since. With the base rate being reduced further to an all-time-low of 0.25% in August this year, repayments will be even lower, meaning that the savings made here could result in consumers potentially having more expendable income.
An increase in disposable income is a positive sign for the UK car market, as consumers who are thinking about financing a car will have more funds to invest in order to purchase the car they really want. In a recent statement on this subject, Director of the National Franchised Dealers Association, Sue Robinson, stated that: “Low interest rates represent an incentive for consumers who want to commit to larger purchases - including cars - and we believe this decision will continue to support the car market”.
The UK car industry does not appear to have been negatively impacted by the result of the UK’s vote to leave the European Union in June of this year. Despite initial concerns over the effect of Brexit and what it may mean for the general economy and the UK car market, new car registrations have, according to The Society of Motor Manufacturers & Traders (SMMT) increased each month following the vote. The statistics for the three-month period of July, August and September show steady increases of 0.1%, 3.3% and 1.6% respectively.
This positive news, as well as Robinson’s comments, show that Britain’s decision to Vote Leave has not had any real impact on consumer’s willingness to purchase cars and car finance. This is supported by Creditplus’s 29% increase in their online car finance applications since the beginning of 2016.
Speaking about the findings, Shaun Armstrong, Managing Director of Creditplus commented: “Low rates, a steady job market and no sign of bank’s limiting liquidity means a steady marketplace for car finance. With asset lending for all or most lenders performing within their provisions, car finance will remain a healthy lending option.”
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