Total car finance, wholesale and retail, rose approximately 20% year-on-year by volume in Q2, according to Experian Automotive.

The credit reference agency and information provider recorded a 20.45% increase in the number of people taking finance on new cars in the second quarter, to 883,018 agreements, and an 18.2% increase to 747,601 agreements on used cars.

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Hire purchase remained the most popular consumer choice for finance with 191,012 agreements (up 28.88%) in place in the new market in Q2, and 232,094 agreements (up 15.3%) in the used market. However, PCP has continued to prove one of the fastest-growing retail products on offer; up 34.14% to 98,038 agreements on new cars, and up 47.96% to 22,407 agreements on used cars.

Personal loans saw an annual decline by volume in both the new and used market, down 22.96% to 8,276 agreements and down 11.26% to 12,680 agreements, respectively. Leasing also fell year-on-year in the new market, as did conditional sale and credit sale products in the used market.

Unit stocking was by far the most popular form of finance between April and June, used by franchised dealers and motor traders to acquire stock, up by 63.64% year-on-year in the new market, where it accounted for 28.61% of finance agreements, and up by 20.9% in the used market, where it now commands 49.73% of agreements.

Andrew Ballard, principal consultant at Experian’s automotive business, said: "Today’s car buyers are doing their research into which form of finance is, first, the most affordable and best value and secondly the most suited to their financial situation.

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"For motor traders, the increase in unit stocking agreements on new cars is interesting. Possible reasons include the increase in new car sales activity and the requirement for flexible funding to assist cash flow."

Meanwhile, 1,804,871 used cars were sold during the quarter, up 4.53%, the first year-on-year increase in Q2 sales since Experian began its records in 2005, and resulting in a four-year sales high for a second quarter. In particular, the Supermini segment, which includes the Vauxhall Corsa and Ford Fiesta, was up by 7.58% to 586,249 sales.

Ballard called the results "positive", adding "sales are being driven by the popular supermini segment and it now accounts for a third of all the used cars sold in the UK."

richard.brown@timetric.com