New figures from the Finance & Leasing Association (FLA) show that 264,377 people used forecourt finance to buy a new car in the first six months of 2010 (representing 49.4% of all new cars sold to consumers). This means more people used dealer finance than personal loans or savings to make a new car purchase. The number of new cars bought on finance was up 26% in the first half of 2010. New car finance sales in May 2010 increased by 15% compared to May 2009 and more than half of car buyers used dealer finance to fund their purchase that month. The figures also show that more than 36,000 people used dealer finance to finance a new car in May.

It's clear that Personal Contract Purchase (PCP) is still the preferred method of funding a new car with 57% of dealer finance by value being provided through a personal contract purchase (PCP) deal in the first six months of 2010. PCP deals have become increasingly popular because of the flexibility offered to customers. Dealers can tailor repayment terms to their customers’ budget and the customer has a choice at the end of the contract on whether to hand the car back, buy it outright or use any equity as a deposit towards their next deal. PCP is increasingly striking a chord with dealers too, as it gives customers a more affordable repayment compared to personal loan or hire purchase agreement.

FLA figures also show that hire purchase is becoming more popular for finance deals on commercial vehicles. In May 61% of commercial vehicles were bought this way, while 36% were leased. Twelve months ago the totals were 57% and 41% respectively.