- 3 min
Findings of Crédit Agricole Consumer Finance study of car financing trends: Credit continues to fuel car sales!
Indeed, in France, an estimated about three new cars out of four and more than one in two used cars are bought by individuals using some kind of financing. That is hardly surprising, given that the average price of a financed car is equal to about one half of a household's annual average earnings.
While the proportion of cars bought on credit remains important, the average amount per financing has fallen by 14% in the past two years for new cars and by 9% since 2004 for used cars. The main reason is that, increasingly, people are opting for cheaper vehicles.
However, the average percentage financed has remained stable over the past three years. On average, households rely on credit to finance 73% of the cost of the car. The older the buyer, the smaller the percentage, and vice versa (80% for buyers aged between 18-29 compared with 61% for those aged 70 and over). The average loan term is four-and-a half-years, stable since 2007 despite an ageing car population.
In France, 50% of new car financing for individuals takes place at the point of sale, i.e. the dealership, and 50% outside of it.
Men are more likely than women to use car financing. The 35-49 age group is the one most likely to use credit to buy a car, more so in households with children.
Car financing allows people to buy more expensive cars that will be driven greater distances. The cost of vehicles purchased on credit is 20% higher than those purchased without, but buyers who have taken out a loan cover 10% more kilometres each year.
The main development will be the emergence of electric cars, which will require different types of financing compared with today's conventional vehicles and will probably involve rental financing for the battery. A change in consumer behaviour has been observed, too: buyers increasingly focus on a car's value in use (credit and associated services).