Car Finance Lending Hits £42.8bn: What It Means If You're Applying Today
UK car finance lending rose to £42.8bn in the year to June 2026. We explain what the figures mean, how they relate to the FCA's compensation scheme, and what it means for new applicants.
Car finance activity continued to grow in June 2026, driven by a sharp rise in the number of new cars purchased using finance.
Figures from the Finance & Leasing Association show that 187,304 new and used cars were financed by consumers through point-of-sale finance during the month. That was 7% higher than in June 2025.
The value of these agreements reached £3.87 billion in June, while consumer car finance advances made by FLA members totalled £42.78 billion during the 12 months to June 2026.
But what do these figures mean if you are thinking about financing a car? And do ongoing developments surrounding historic motor finance commission affect new applications?
In this guide
- What the latest car finance figures show
- Why new car finance is driving market growth
- What the £42.8 billion figure means
- What the figures mean for car finance applicants
- Whether the FCA compensation scheme affects new finance
- What to consider before applying
- Key takeaways
What do the latest car finance figures show?
Consumer car finance new business volumes increased by 7% in June 2026 compared with the same month in 2025. The value of new business also rose by 11%.
Across the first six months of 2026, the total number of new and used cars financed by consumers was 4% higher than during the same period in 2025.
However, the figures reveal a clear difference between the new and used car markets.
| Market | Cars financed in June 2026 | Annual change in volume | Value advanced | Annual change in value |
|---|---|---|---|---|
| New cars | 70,614 | +21% | £2.04bn | +21% |
| Used cars | 116,690 | Broadly unchanged | £1.83bn | +1% |
| Combined | 187,304 | +7% | £3.87bn | +11% |
Source: Finance & Leasing Association motor finance statistics.
Why is new car finance growing?
New car finance accounted for most of the market’s growth in June.
FLA members financed 70,614 new cars for consumers during the month. Both the number of cars financed and the value advanced were 21% higher than in June 2025.
Across the first half of 2026, new car finance volumes were 17% higher than during the same period in 2025.
The FLA linked some of this growth to stronger demand for electric vehicles. According to the organisation, its members fund almost nine in ten private new car purchases and almost all private purchases of new battery electric vehicles.
Finance can make new vehicles more accessible by spreading the cost over an agreed period. However, applicants should still consider the deposit, interest rate, agreement length and total amount payable before choosing an option.
What is happening in the used car finance market?
Used car finance remained relatively steady in June 2026.
Consumers financed 116,690 used cars during the month, broadly unchanged from June 2025. The value of these advances reached £1.83 billion, representing an annual increase of 1%.
Across the first half of 2026, used car finance volumes were 2% lower than during the same period in 2025.
This does not necessarily mean that demand for used cars is falling sharply. Instead, the figures suggest that most of the recent growth in consumer car finance has come from the new car market.
What does the £42.8 billion figure mean?
The £42.78 billion figure represents the value of consumer new and used car finance advances made through point-of-sale finance by FLA members during the 12 months to June 2026.
Over the same period, 2,126,272 new and used cars were financed for consumers. That was 3% higher than during the previous 12 months.
The figure should not be confused with the FLA’s wider motor finance measure, which also includes finance provided to businesses. Across consumer and business motor finance, FLA members reported £5.19 billion of new business during June alone.
What does this mean if you are applying for car finance?
The figures suggest that car finance continues to play a significant role in helping UK consumers access new and used vehicles.
However, a growing market does not guarantee that every applicant will be accepted or receive the same terms.
Car finance providers usually assess applications individually. Depending on the lender and product, factors may include:
- Credit history
- Income and regular expenditure
- Existing borrowing
- Affordability
- Employment circumstances
- The amount being borrowed
- The deposit available
- The vehicle’s age and value
- The length and type of finance agreement
Every lender uses its own criteria, so being declined by one provider does not necessarily mean that car finance will be unavailable elsewhere.
It is also important to remember that submitting multiple full applications within a short period could result in several hard searches appearing on your credit file.
Does a busier market make car finance easier to obtain?
Not necessarily.
The latest figures measure the number and value of vehicles financed across the market. They do not show that lenders have changed their individual eligibility or affordability requirements.
While a wider choice of vehicles and finance products may be available, approval still depends on the applicant’s circumstances and the lender’s criteria.
Before applying, it can help to:
- Review your credit reports for incorrect information
- Work out an affordable monthly budget
- Account for insurance, tax, fuel and maintenance
- Compare the total amount payable, not only the monthly payment
- Check whether an eligibility assessment will affect your credit score
- Make sure the agreement suits how you intend to use and eventually own the car
Which type of car finance could be suitable?
The right option will depend on your budget, preferences and plans for the vehicle.
Hire Purchase
Hire Purchase, commonly known as HP, spreads the cost of a vehicle through a deposit followed by fixed monthly repayments.
Once all required payments have been made, including any applicable option-to-purchase fee, ownership of the vehicle transfers to the customer.
Monthly payments can be higher than an equivalent PCP agreement because they are based on repaying most or all of the vehicle’s financed value during the agreement.
Personal Contract Purchase
Personal Contract Purchase, or PCP, also usually involves paying a deposit followed by fixed monthly repayments.
The monthly payments are partly based on the vehicle’s expected value at the end of the agreement. This can make them lower than equivalent HP payments, but a larger optional final payment is normally required if you want to keep the vehicle.
At the end of a PCP agreement, the available options will usually include returning the car, paying the optional final payment to keep it or using any available equity towards another vehicle. Conditions, mileage limits and potential charges may apply.
Whichever type of finance you consider, compare the APR, deposit, agreement length and total amount payable before deciding.
Does the FCA motor finance compensation scheme affect new applications?
The FCA’s motor finance compensation scheme relates to certain historic agreements entered into between 6 April 2007 and 1 November 2024. It does not determine whether someone can apply for or obtain a new car finance agreement in 2026.
The historic scheme focuses on particular commission arrangements between lenders and brokers and what customers were told when the finance was arranged.
Under the FCA’s current rules, an agreement does not qualify simply because commission was involved or because it falls within the relevant dates. Eligibility depends on the scheme’s conditions, exclusions and the circumstances of the individual agreement.
The arrangements covered by the scheme can include:
- Discretionary commission arrangements
- Certain high commission arrangements
- Certain contractual ties between lenders and brokers
Personal Contract Hire agreements are not covered by the scheme.
Where does the FCA scheme currently stand?
The FCA introduced its Motor Finance Commission Consumer Redress Scheme on 30 March 2026.
The scheme was subsequently challenged in the Upper Tribunal. On 1 July 2026, the Tribunal ordered a partial suspension of certain parts of the scheme.
This does not mean that the entire scheme has been cancelled.
While the legal proceedings continue, lenders are not currently required to calculate or pay compensation under the scheme or tell consumers how much compensation they may be due.
However, firms must continue with parts of the scheme that have not been suspended. This includes identifying relevant complaints and agreements and collecting information about commission arrangements and disclosure.
The FCA says the legal challenges are expected to be heard either from 14 to 18 December 2026 or from 16 to 26 February 2027. The final dates will depend on how the case develops.
There is currently no confirmed date for compensation payments to begin. If the scheme is upheld and the judgment is not appealed, the FCA expects payments to start during 2027.
Can you still complain about a historic agreement?
Yes. Consumers who are concerned about a historic motor finance agreement can still complain directly to their lender.
The partial suspension affects certain stages of the scheme, including the calculation and payment of compensation. It does not prevent consumers from raising complaints.
You do not need to know the exact amount of commission involved before contacting your lender. If possible, it can help to gather any records showing the lender, broker, agreement date and type of finance involved.
The historic complaints process is separate from applying for a new car finance agreement.
What should you consider before applying for car finance?
Growing demand does not change the importance of choosing an affordable and suitable agreement.
Before submitting an application, consider:
Your overall budget
Look beyond the advertised monthly payment. Include the deposit, interest, fees and total amount payable, as well as the cost of running the vehicle.
The agreement length
A longer agreement may reduce the monthly payment, but it can also increase the total amount of interest paid.
The APR
The representative APR shown in an advert will not necessarily be the rate every applicant receives. The rate offered can depend on the lender, product and individual circumstances.
Your deposit
A larger deposit reduces the amount that needs to be financed. However, you should avoid using money needed for essential expenses or emergencies.
Your plans for the car
Consider whether you want to own the vehicle, change it regularly or keep your options open. This can help you decide whether HP, PCP or another arrangement is more appropriate.
Your credit profile
Reviewing your credit reports before applying can help you identify incorrect information or understand issues that may affect an application.
Key takeaways
- Consumer car finance volumes increased by 7% in June 2026 compared with June 2025.
- The value of consumer car finance advances reached £3.87 billion during the month.
- FLA members advanced £42.78 billion through consumer car finance during the 12 months to June 2026.
- New car finance drove most of the growth, with volumes and values both increasing by 21% in June.
- Used car finance volumes were broadly unchanged during the month.
- Market growth does not guarantee acceptance or change how individual applications are assessed.
- The FCA’s historic compensation scheme is separate from new car finance applications.
- Applicants should compare affordability, APR, agreement length and total amount payable before choosing finance.
