The value of financial deals used to buy new cars has soared to a new monthly record, according to latest figures.
Motorists spent £3.6bn on automobile financial deals in March, a arise of 13% on a same month in 2016, a Finance and Leasing Association (FLA) said.
The immeasurable infancy of a purchases were around supposed Personal Contract Purchases (PCPs).
The Bank of England and a Financial Conduct Authority (FCA) have lifted concerns about such deals.
The Bank’s worry is in propinquity to levels of consumer borrowing.
However Adrian Dally, conduct of engine financial during a FLA, pronounced lenders were working responsibly.
“We do not share their concerns,” he told a BBC. “Lending is responsible. This is a tolerable denote going forwards.”
Both new and used cars can be bought on PCPs, underneath that buyers effectively lease a automobile for adult to 4 years.
They can afterwards compensate a final pile sum or lapse a automobile during no additional cost during a finish of a agreement – as prolonged as it is within an concluded mileage and in good condition.
Including used cars, consumers spent a record £32.5bn on automobile financial deals in a year to March, a FLA said.
March was a record month for automobile sales as a whole, as it came forward of changes to Vehicle Excise Duty in April.
The changes quite influenced oppulance cars, boosting a value of sales. Following a introduction of a changes in April, sales fell back.
Consumer groups pronounced that motorists should consider delicately before committing to PCP deals.
“Today’s total are a serve denote of a recognition of automobile financial deals,” pronounced Joanna Elson, arch executive of a Money Advice Trust – a gift that runs National Debtline.
“For many consumers this offers entrance to a automobile that would differently be unaffordable, however it is critical that a affordability of offers is entirely assessed and that consumers are transparent on a terms so that they know from a opening what they are committing to, and can devise accordingly.”
The FCA is questioning automobile financial deals. It pronounced it was disturbed about a “lack of transparency, intensity conflicts of seductiveness and insane lending in a engine financial industry”.
But while some economists are disturbed about a expansion in automobile financial deals, others contend concerns are overdone.
That is mostly since motorists can palm their cars behind if they can no longer means payments.
Ultimately it is a automobile manufacturers who lift a risk on such deals, as they pledge used values.