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28 November 22 Press releases

Rising cost of borrowing not deterring motor finance demand as engagement rockets on Auto Trader


Consumer engagement for used car finance on Auto Trader up 46% on pre-pandemic levels with 45 people interacting with finance every minute

According to the latest data from Auto Trader, despite the current backdrop of economic uncertainty and the highly publicised rise in interest rates, consumer demand for motor finance remains strong. In fact, with over 1.9 million finance interactions on its platform last month – the equivalent of 45 car buyers juggling their finance options every minute – the level of finance engagement on its marketplace is up over 46% on pre-pandemic levels. And with over 1.6 million finance calculator interactions already recorded in November[2], this month is on track to surpass October's high.

As highlighted by the Annual Percentage Rates (APR)[3] powering finance calculators on Auto Trader, the cost of borrowing has risen sharply on new cars[4], with the average rate climbing from 4.6% in November 2021 to 7.7% this month[5]. The growth in used car APR[6] has been less steep, albeit from a higher base level, rising by just over 1 percentage point from 9.4% to 10.7% over the same period.

Despite the higher cost however, consumers haven’t been deterred from finance, particularly used car buyers; the Finance and Leasing Association’s (FLA) latest figures report second-hand car finance penetration is now at a record 45%[7]. This is reflected on Auto Trader, where consumer interaction with finance calculators on used car adverts is rising sharply, with levels in October up 14% on both 2021 and 2020, and a massive 46% on 2019. Notably, the data reveals a steady upward trajectory of engagement over recent months, with September and August recording a 43% and 36% increase on 2019 levels. And in January of this year, consumer interaction was up a comparatively conservative 22% on January 2019.

There’s also been little change in the terms selected by consumers on the calculators, in regard to both monthly payments and preferred deposit levels. Indeed, last month 50% of all monthly payment options were below £250, which is down just 1 percentage point on January 2022 (51%), and flat against October 2021 (50%). The higher price bands remain similarly flat or just one percentage point different. It’s an almost identical picture on the chosen deposit contributions.

A further indication of the growing importance consumers place on used car finance, and the opportunity it represents, is the huge volume of enquiries retailers who display finance calculators on their adverts (74% of Auto Trader’s circa 13,500 retailer partners) receive. In fact, each month, between 25,000 – 30,000 finance leads are generated, which is up 15.5% year-on-year.

Commenting, Auto Trader’s Automotive Finance Director, Fiona Mackay, said: “All signs on our marketplace point to the growing importance of finance, especially amongst used car buyers. With average second-hand prices up around 47% on pre-pandemic levels, coupled with the current economic turbulence, finance offers many car buyers a more manageable route to access their next car. Although the vast majority of our retailer partners advertise finance on their adverts, nearly a quarter don’t - with more price conscious consumers searching by monthly payments, a significant, and worrying, number of businesses are at risk of missing out.”

Auto Trader data shows that nearly two thirds of people (63%) want to complete their finance applications online before arriving at the forecourt. As part of its strategy to enable its retailer partners to meet the changing needs of car buyers, it will allow consumers to apply online for finance with the retailer’s preferred lenders, enabling more buyers to go from searching useful finance information online, to digitally managing one of the trickier and more time-consuming car buying jobs in a flexible and transparent way.

Limited impact of rising rates on car buyers

The reason that motor finance demand is remaining stable is largely due to motor finance propositions being very different from other finance products on the market. Chief among the key differences is that motor finance is much less affected by base rate rises due to the fact consumers are in fixed PCP and HP contracts – it’s only when buying a new car or financing a balloon payment that a new rate may affect them. Even then however, the financial impact is relatively limited. For example, a 1% increase on a £10,000 car equates to just £5.00 per month more versus the equivalent on their mortgage.

What’s more, existing owners who choose to part-exchange their current car are shielded even further from the higher borrowing costs, with the value serving to reduce the gap of their new finance contract.

Mackay added: “Finance is the number one discussed topic amongst consumers in online chat enquiries on our platform. It not only highlights that finance is front of mind for many car buyers, but also the opportunity for retailers to inform and educate customers, helping to put these changes into the correct context.”   



[1] January – October 2022

[2] Up to 23rd November 2022

[3] Average APR based on PCP, HP and Conditional Sale finance products only

[4] New car rates include all lenders live with new car finance (17 lenders total)​

[5] As of 14th November 2022

[6] Used car rates include all lenders on AutoTrader (80 lenders total - excludes Zuto, CarMoney and AutoConvert) ​

[7] FLA data, October 2022

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