With interest rates in the UK steadily climbing – the decade-long era of low-interest rates is fading – which means financing a new or used vehicle is becoming more expensive than it once was. According to figures released by Auto Trader, the average new car APR is 4.5 percentage points higher than it was two years ago. 

Vehicle finance: June 2023

As might be expected, with the cost of financing going up, the percentage of cars sold on finance has fallen too, however, this is more true for new cars than for used cars. 

Against this backdrop, monthly car payments are on the rise due to higher APRs and car prices, prompting car buyers to consider used car financing as an option, says Auto Trader, citing the growing interactions potential car buyers are having with its online used car calculator, up 13% year-on-year in June 2023. 

Consumer car finance new business volumes fell by 10% in May 2023