Flexible consumer credit arrangements such as PCP and HP are gaining popularity in the UK, according to information services company Experian.
Data from Experian’s records showed that PCP is the fastest growing finance option for car buyers in the UK.
Since 2012, the number of used cars financed with the help of such loans has risen 64.4%, while the number of new cars purchased through PCP also grew 40.4%.
However, despite registering slower growth of 17.6% on 2012 figures, HP remained the UK’s first choice for vehicle finance, with over 1.5 million agreements live in 2013, on both new and used purchases.
Overall, the number of cars purchased with the aid of finance in the UK totalled 7.4 million in 2013, according to Experian.
The figure represents a 22.64% increase on 2012 values, and a 55.36% on the number of financed purchases of vehicles recorded in 2011.
Andrew Ballard, principal consultant at Experian’s automotive business, described the substantial growth in PCP loans as consistent with consumer attitudes concerning motor finance.
"This form of motor finance fits in perfectly with what car buyers primarily look for when making that purchase decision in a challenging economy: flexibility, low monthly repayment costs and the option to purchase the vehicle outright, walk away or switch for a new model within two to three years," he said.
He added that the shift will mean increased sales for car dealers, as well as offering an opportunity to foster loyalty among their customers.
"We are also seeing a marked shift in the way cars are being advertised, with the monthly payments being prominent to help consumers understand the impact to their regular household expenditure," he said.