Spectrum of car finance providers getting broader

A study carried out by a professor from the University of Buckingham has revealed that a broader range of options for car finance exist than ever before.

Professor Cooke's study showed that point of sale finance has slumped between 1997 and 2006, because it suffers from a weak image and is often perceived to be uncompetitive.

A whole host of other car finance options have emerged, such as manufacturers' finance houses and high street bank finance. These companies have won business from car dealers by aggressively promoting their car finance products.

From 1997 to 2006, the used car market in the UK has consistently been about three times the size of the new car market. Private buyers account for about half of total new car sales and virtually all used car sales.

In the same period, franchised dealers' new private car finance penetration fell from 52 per cent to 41 per cent, while used car finance penetration dropped from 53 per cent to 30 per cent. Independent dealers' used car finance penetration dropped from 40 per cent to 20 per cent.