New data released by vehicle history expert Cartell.ie has shown a significant rise in the overall levels of car finance for certain key years in Ireland.
From a sample of over 5,906 vehicles offered for sale and checked via the Cartell.ie website in the first six months of 2022, the figures show that a one-year-old vehicle now has a 32 per cent likelihood of being on finance - up 4 per cent on the equivalent figure from a year ago.
The number of two-year-old (2020) vehicles on sale with finance outstanding now stands at 36 per cent, again up four per cent on twelve months ago.
For four-year-old (2017) cars, the percentage being sold with finance outstanding is now 22 per cent, up from 20 per cent.
Even some older model years show increased levels of outstanding finance, with 17 per cent of six-year-old (2016) cars being sold with money owed, up one per cent on last year.
Why are the figures up?
In January, Cartell published its data from the first eleven months of 2021 and it showed an overall fall in the number of used cars being sold with finance outstanding.
The firm attributed this to a wide range of factors including the pandemic, the post-Brexit sales landscape and the shortage of new cars due to the global semiconductor crisis forcing people to hold onto their current cars for longer.
Thanks to that shortage of new cars, the value of used trade-ins was higher, meaning that less finance was required to bridge the gap between trade-ins and new cars. Another aspect to the inflated value of used cars was the drop-off in imports as a result of both changes to the VAT and VRT regimes here, as well as the relative scarcity of good-value used cars on the UK market.
Because, as a result of Covid lockdowns, many people were able to make financial savings, there may, generally, have been less need for finance. With people working from home in 2021, a new car was likely not seen as the necessity it may have been. On the other side of the coin though, lenders, Cartell said, may have been reluctant to finance new car purchases by people whose jobs may not have been secure as a result of the pandemic.
Despite the fact that, as a result of the war in Ukraine, Covid-related lockdowns in China and the still-ongoing semiconductor shortage, the supply of new cars to the market has not significantly increased, meaning that values for used cars still remain high, the emergence of the economy from its pandemic and immediate post-pandemic phase has likely had an effect on increasing the number of used cars sold with finance outstanding.
While it's too early to definitively attribute specific causes to the current trend, a number of new factors could be at play including consumers having burned through some of the savings they made during lockdowns (helped in no small part by the cost-of-living crisis) as well as the market returning to something closer to normal levels after a particularly unusual 2020 and 2021.
Consumer warning
Buyers should be vigilant when buying a car with finance outstanding as they won't actually own the car until the final payment has been made. As ever, Cartell.ie has released this data in the hope that it will encourage buyers to avail of its car history service.