Number of Car Loans Rise As Car Buyers Rush To Beat VAT Increase

One in five car buyers will fund their purchases with a car loan, as the number of people planning to buy a car over the next six months increases to a three year high.

The latest figures from the Sainsbury’s Finance Car Buying Index, which tracks the number of people planning to purchase a car on a six-monthly basis, reveal the number of people planning to buy a car in the six months to February next year is at a three-year high.

This means that people plan to spend a total of £51 billion on new and used cars in the next six months. This represents an increase of £1.9 billion on six months ago and is the first time the index has revealed an expected spend on cars to top £50 billion since September 2007.

After three years of tightening their belts it seems that an increasing number of consumers are seeking to arrange suitable finance or raid their savings in order to buy a new car. It had been feared that the demise of the car scrappage scheme would significantly reduce new car sales, says Steven Baillie, Head of Loans at Sainsbury’s Finance, so this is welcome news for the car industry.

“Another factor that could be helping to fuel an expected rise in 2010 car sales is the planned rise in VAT, due to come into force in January 2011. This could see buyers bring their car purchases forward to beat the rise.”, Mr Baillie added.