A record 1.5 million used cars will be financed by consumers in the UK this year, borrowing a massive £23 billion, according to research by AA Car Finance.

Consumers bought 388,309 second-hand cars on finance in the first three months of 2023, up from 379,512 the previous year.

If current trends continue, UK motorists will be on course to borrow £23 billion for used car purchases this year, a huge 164% increase on the nearly £9 billion loaned out in 2013, research by AA Cars Finance found.

Ten years ago, customers bought only 915,340 used cars on finance, but an appetite for alternatives to buying outright means 2023 is set to show such purchases have risen 69%.

While the total volume of loans advanced is tipped to hit record levels, the amount borrowed per vehicle is down by more than 5% – from £15,744 in the first quarter of 2022, to £14,913 in the same period this year.

Experts say this is because vendors are asking for larger deposits as lending criteria become more strict amid surging interest rates. AA Car Finance data shows the average car loan value has fallen from £12,510 in 2022 to £12,482 in 2023.

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Mark Attwell, Director at AA Car Finance, said: “The popularity of used cars continues to rise, and consumers are increasingly turning to finance to make purchases due to squeezed incomes.

“A fall in the average amount of finance per vehicle is likely to be due to tighter lending criteria and more stringent affordability checks. Many motorists may find that they need to put down a bigger deposit this year to get a similar finance deal.

“Despite soaring interest rates, there are still good value finance deals on the market, so make sure you shop around online before committing to a package.”