Consumer demand for car finance strengthened in June 2026, with the number of vehicles bought using point-of-sale finance rising by 7% compared with the same month last year [1].

New figures from the Finance & Leasing Association (FLA) show that 187,304 new and used cars were financed for consumers during the month [2]. The value of advances reached £3.87 billion, an increase of 11% year on year.

Growth was particularly strong in the new car market, while used car finance remained broadly flat.

The figures provide a snapshot of a car finance market that continues to attract substantial consumer demand despite the regulatory and legal scrutiny surrounding historic motor finance commission arrangements.

New car finance rises 21%

The strongest growth came from consumers financing new vehicles.

FLA members financed 70,614 new cars in June, 21% more than during the same month in 2025. The value of those advances also increased by 21%, reaching £2.04 billion.

Growth has not been confined to a single month.

During the first half of 2026, consumer new car finance volumes were 17% higher than during the equivalent period last year.

Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said the June figures completed a strong first half for the market, with growth supported by demand for new cars and electric vehicles.

FLA members now finance almost nine in ten private new car purchases and almost all private purchases of new battery electric vehicles, according to the association.

Used car finance tells a different story

The performance of the used market was considerably more subdued.

Consumers financed 116,690 used cars in June, effectively unchanged from June 2025.

The amount advanced increased by just 1% to £1.83 billion. Across the first six months of the year, the number of used cars financed was 2% lower than during the same period in 2025.

That creates a noticeable divide within the market.

Demand for finance associated with new vehicles has accelerated, while the used car finance market has remained relatively stable.

More than £42bn advanced over 12 months

The longer-term figures illustrate the scale of consumer reliance on vehicle finance.

During the 12 months to June 2026, consumers financed more than 2.12 million new and used vehicles through FLA members.

The value of those advances reached approximately £42.78 billion, 7% higher than during the previous 12-month period. Volumes increased by 3%.

Across consumer and business lending combined, motor finance accounted for £5.19 billion of new business in June alone, representing a 13% year-on-year increase.

The figures underline the continuing importance of motor finance to the UK vehicle market.

Electric vehicles help support growth

The FLA has attributed part of the strength of the new car market to growing demand for electric vehicles.

The association says finance is playing an important role in helping households make the transition towards cleaner vehicles.

However, attention is increasingly turning towards what happens when greater numbers of electric vehicles reach the second-hand market.

The FLA has argued that supporting demand for used electric vehicles will become important in maintaining a sustainable balance between the new and used markets. It has also welcomed the Government's review of the Zero Emission Vehicle Mandate, while calling for a framework that supports confidence among manufacturers and investors.

PCP remains an important part of new car finance

Personal Contract Purchase continues to play a significant role in the way consumers finance new vehicles.

FLA figures for 2025 show that PCP accounted for 79.8% of new consumer car finance volumes, although its share had fallen from 82.6% a year earlier [3].

Under PCP car finance, consumers typically make monthly payments during an agreed term before deciding how to deal with the vehicle at the end of the agreement, subject to the contract.

The continued popularity of PCP helps explain why developments affecting motor finance can have consequences for a substantial number of UK motorists.

Current lending is separate from historic car finance claims

The latest growth figures arrive while the industry continues to deal with the consequences of historic commission arrangements.

These two issues should be distinguished.

The FLA statistics measure new car finance agreements being entered into by consumers today. The ongoing car finance scandal, by contrast, concerns historic finance arrangements and whether particular commission practices created an unfair relationship between lenders and consumers.

The FCA's Motor Finance Compensation Scheme covers certain agreements entered into between 6 April 2007 and 1 November 2024.

Consumers with potentially eligible historic agreements may have a mis-sold car finance claim or, where the agreement involved PCP, what is commonly described as a PCP claim.

However, not every historic agreement qualifies, and the continued growth of the present-day market does not indicate whether individual car finance claims will succeed.

Similarly, taking out PCP car finance today should not be confused with having experienced car finance mis-selling under a historic agreement.

Compensation scheme remains partially suspended

The industry's current performance also comes while parts of the FCA's Motor Finance Compensation Scheme remain suspended following legal challenges.

The Upper Tribunal partially suspended elements of the scheme in July while the challenges are considered [4]

The FLA welcomed that decision and said firms would continue preparing for the scheme and complying with requirements that remain in force. Compensation payments under the suspended provisions cannot begin while the legal process remains unresolved.

The proceedings therefore continue to affect the handling of historic PCP claims and other motor finance complaints without preventing lenders from writing new business.

Car finance market remains resilient

June's figures suggest that uncertainty surrounding historic complaints has not prevented consumers from continuing to use vehicle finance in significant numbers.

The distinction between new and used vehicles is particularly notable.

New car finance volumes increased 21% in June, while used car volumes were unchanged. Across the whole consumer market, volumes increased 7% and the amount advanced rose 11%.

For the motor finance industry, that creates two very different challenges.

Lenders are continuing to finance millions of current vehicle purchases while simultaneously preparing to resolve historic complaints under the FCA car finance compensation framework.

How the industry manages those two sides of the market will remain an important issue as the legal challenges surrounding historic car finance compensation claims progress and demand for new vehicle finance continues to evolve.

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References:

1. Consumer demand for car finance strengthened in June 2026, with the number of vehicles bought using point-of-sale finance rising by 7% compared with the same month last year - https://www.credit-connect.co.uk/news/consumer-lending/consumer-car-finance-grows-by-7/
2. New figures from the Finance & Leasing Association (FLA) show that 187,304 new and used cars were financed for consumers during the month - https://fla.org.uk/research/motor-finance-statistics/
3. FLA figures for 2025 show that PCP accounted for 79.8% of new consumer car finance volumes, although its share had fallen from 82.6% a year earlier - https://www.youtube.com/watch?v=Pyw-KCRURsE&
4. The Upper Tribunal partially suspended elements of the scheme in July while the challenges are considered - https://www.fca.org.uk/news/statements/motor-finance-scheme-partially-suspended