Auto finance demand set to accelerate as UK lockdown eases off 

Zopa Bank was launched in 2005 and the company is predicting an auto finance boom, as lockdown eases and pent-up demand for big ticket purchases is released. Having held back in 2020, Zopa’s data suggests UK consumers are now feeling buoyant and ready to spend.

Zopa’s data reveals that year-on-year, the total amount of car finance lent by the neobank has increased 50 per cent from February 2020. As many people have been able to save more through the lockdown and bolster household finances, Zopa’s data suggests that a sense of financial comfort is leading to people feeling more able to commit to the monthly payments associated with a car finance loan. The average car loan made in Q1 was just under £10,000.

In addition to the latest savings ratio, which reached a record 16.3 per cent last year, up from 6.8 per cent in 2019, the findings point to an evolving picture of household finances as the UK emerges from the pandemic lockdown.

Government advice around avoiding public transport may also be playing a part, as people reconsider how they travel. Recent data revealed levels of car use returned to normal between lockdowns, while train travel peaked at around 40 per cent of pre-Covid levels. Increased spending levels could also be in response to the expectation of increased driving activity as families plan more UK-based holidays, in line with Government guidance.

Tim Waterman, Chief Commercial Officer at Zopa comments: “At the start of the pandemic, people were cautious about spending as many predicted some personal financial shocks. For those who were able to save, there’s a sense of financial security, which is now giving them the confidence to spend. As lockdown begins to ease, the handbrake is coming off and a new car appears to be high on the shopping list.”

Zopa car loans are offered via a fully online process which takes as little as three minutes to complete. This style of financing is well suited to current consumer needs as some car-dealerships have been forced to close, and to the post-pandemic world where people are increasingly looking to compare and obtain financial products without leaving their home.