The number of cars sold on dealer finance grew 8% year-on-year in 2016, to 2,298,850, according to the Finance & Leasing Association (FLA).
This finance was worth £31,643m, a rise of 12% compared to 2015.
Breaking this down by category, the new car market increased 6% by volume and 12% by value in 2016 compared to the year before, while used car finance increased 9% by volume and 12% by value in the same period.
As a result of this growth, the percentage of private new car sales financed by FLA members through the POS reached 86.6% in 2016, up from 81.4% in 2015.
Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The point of sale consumer car finance market reported another record year in 2016, with new business volumes reaching 2.3 million cars. Our latest confidence survey suggests broadly stable new business volumes in 2017.”
Overall, the FLA reported its members provided £118 billion of new finance to UK businesses and households in 2016. £88 billion of this was in the form of consumer credit, over a third of total new consumer credit written in the UK in 2016.
While the growth for the year remained relatively high, there was a notable slowdown in December. The number of new cars sold on finance actually shrank 8% year-on-year to 61,952 in the month, although the value of this finance grew slightly: 1% to £1,167m.
This marked the end of a fairly slow Q4 for new car finance. During this quarter the number of new cars sold on finance remained virtually static at 213,574, although the value of the finance increase 7% to £3,870.
The used car market fared slightly better in December, with 77,436 used cars bought on finance (up 2%) worth £884m (up7%).
Overall this meant that 139,388 cars were sold in December, 3% less than in December 2015, worth £2,051m, 3% more than in 2015.