The UK car finance market slowed slightly in July, but the overall figures only tell part of the story. Consumers financed fewer cars than they did a year earlier, while new and used car finance moved in very different directions.

New business volumes were down 2% compared with July 2025, according to the latest Finance & Leasing Association (FLA) figures [1]. New car finance continued to grow, while fewer consumers took out finance for used cars.

A total of 171,469 cars were bought by consumers using point-of-sale finance during the month. The value of advances was £3.37 billion, unchanged from July 2025.

The overall decline was driven by the used car finance market. Used car finance volumes fell by 7% year-on-year, while new car finance volumes increased by 10%.

July may have been a slower month overall, but the market is still running ahead of last year. Across the first seven months of 2026, consumer car finance volumes were 3% higher than during the same period in 2025.

New car finance volumes rise 10%

New cars were the brighter spot in July. Consumers financed 54,313 new vehicles through point-of-sale finance during the month, 10% more than in July 2025.

The value of new car finance advances also increased by 10% to £1.55 billion.

Growth was also evident across the year to date. New car finance volumes during the first seven months of 2026 were 16% higher than during the equivalent period in 2025.

Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said the strong performance suggested consumers remained willing to make significant purchases where confidence and affordability allowed [2].

The FLA also pointed to the increasing availability of more affordable new battery electric vehicles as a possible factor influencing purchasing decisions.

Kilkelly said this was likely to be encouraging some consumers to choose a new vehicle rather than a used one, contributing to weaker demand in the used car finance market.

Used car finance volumes fall 7%

Used car finance moved in the opposite direction in July.

Consumers financed 117,156 used cars during the month, down 7% from July 2025.

The value of advances fell by 8% to £1.82 billion.

That gap becomes even clearer when looking at the year so far. New car finance volumes were up 16% in the first seven months of 2026, while used car finance volumes fell 3% compared with the same period last year [3].

The latest figures therefore show contrasting trends across the two parts of the consumer car finance market.

July follows stronger growth in June

The July figures also represent a change from the stronger growth recorded a month earlier.

Consumer car finance new business volumes increased by 7% year-on-year in June 2026, while the value of new business rose by 11%.

New car finance market was particularly strong that month. Both the number of new cars financed and the value of advances increased by 21% compared with June 2025.

Used car finance volumes were unchanged year-on-year in June, while the value of advances increased by 1%.

July therefore brought weaker overall year-on-year figures, with total volumes falling 2% after June's 7% increase.

However, the FLA described the consumer car finance market as "broadly resilient", noting that volumes remained 3% higher across the first seven months of 2026 [4].

£26bn provided for new and used car purchases

The figures form part of a wider picture of lending by FLA members.

Across asset finance, consumer finance and motor finance, FLA members provided £98.2 billion of new lending during the first seven months of 2026. That was 4% higher than during the same period last year.

Of this, £73.6 billion was provided to households, including £26 billion to support new and used car purchases.

The July car finance figures themselves cover finance obtained by consumers through the point of sale, rather than every possible way a motorist could borrow money to buy a vehicle.

What is happening in the UK car finance market?

The latest data points to a market where overall consumer car finance activity remains above last year's level, despite July's modest decline.

New car finance has been the stronger part of the market so far in 2026, with volumes increasing 16% during the first seven months of the year.

Used car finance has been weaker, with volumes down 3% over the same period.

The FLA said July's figures indicated an economy continuing to grow at a modest pace and called for measures that strengthen consumer confidence and support investment.

The association also highlighted the potential role of more affordable battery electric vehicles in the changing balance between new and used car demand.

The data does not, however, establish that electric vehicles are the sole reason for the difference between the two markets. The FLA described their increasing availability as a factor that was "likely" to be influencing consumer decisions.

How does this relate to car finance claims?

The latest figures measure current consumer car finance activity and are separate from the regulatory and legal developments concerning historic motor finance commission arrangements.

A rise or fall in new lending does not establish whether consumers with older agreements have valid car finance claims, nor do the July figures demonstrate that historic commission complaints are responsible for changes in current lending.

The FCA's Motor Finance Compensation Scheme [5] deals with certain historic motor finance agreements and has its own eligibility requirements.

The FLA figures, by contrast, provide a snapshot of how many new and used cars consumers are currently financing through point-of-sale arrangements.

What happens next?

The July figures show that the overall consumer car finance market remains ahead of 2025 on a year-to-date basis, even after activity slipped during the month.

For the first seven months of 2026, overall new business volumes were up 3%, with growth concentrated in new car finance.

The next sets of industry figures will provide further evidence of whether the July fall in used car finance develops into a longer-term trend or whether demand begins to recover.

For now, the clearest divide is between the two sides of the market: new car finance volumes rose 10% in July, while used car finance volumes fell 7%.

_________

References:

1. New business volumes were down 2% compared with July 2025, according to the latest Finance & Leasing Association (FLA) figures - https://www.credit-connect.co.uk/news/consumer-car-finance-fell-by-2-in-july/
2. Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said the strong performance suggested consumers remained willing to make significant purchases where confidence and affordability allowed - https://finance-connect.com/consumer-car-finance-volumes-dip-2-in-july-as-new-car-market-strengthens/
3. New car finance volumes were up 16% in the first seven months of 2026, while used car finance volumes fell 3% compared with the same period last year - https://modernlender.co.uk/consumer-car-finance-new-business-volumes-fell-by-2-in-july-2026.html
4. the FLA described the consumer car finance market as "broadly resilient", noting that volumes remained 3% higher across the first seven months of 2026 - https://www.business-money.com/announcements/consumer-finance-new-business-fell-by-1-in-july-2026/
5. FCA's Motor Finance Compensation Scheme - https://www.fca.org.uk/publications/policy-statements/ps26-3-motor-finance-consumer-redress-scheme