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Motorists 'to fund new car purchase with loan'

More than a quarter of people who intend to buy a new car in the next six months will use a loan to fund at least some of their purchase, according to a new study.

Figures from Sainsbury's Bank suggested that out of the total amount of money that will be spent on buying a car, 15.8 per cent will come from personal loans.

This works out to approximately £8.41 billion.

However, the firm has predicted that the overall number of people planning to buy a new car will drop before August, with 430,000 fewer buyers than during the previous six month period.

As a result, the amount spent on purchasing cars would drop by £16.3 billion to £53.2 billion.

Steven Baillie, loans manager at Sainsbury's Bank, said: "This fall represents by far the biggest drop we've witnessed to date.

"It is difficult to say exactly what is fuelling the decrease in anticipated spend on new cars."

Mr Bailie speculated that factors such as concerns about the environment and rising interest rates could be behind the downturn.

Many car owners are likely to be hit by this week's Budget as chancellor Gordon Brown attempts to establish his green credentials.

Click here to see how much you could borrow with a Lombard Direct personal loan.

20/03/2007 16:51:02

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