New figures released by UK trade association, the Finance and Leasing Association (FLA), have revealed that car buyers prefer dealer finance ahead of either personal loans or savings as a means of financing their new car purchase.

It was shown that more people used forecourt finance than personal loans or savings to purchase a car in the first half of 2010. More than a quarter of a million people used dealer finance over that period, which was nearly half of all new cars sold to consumers. There was an increase of 26 per cent in the amount of new cars bought on finance in the first half of this year.

Paul Harrison, Head of Motor Finance at FLA, said The first half of 2010 has been very positive for dealer finance. We do expect consumer demand to reduce in the next few months but November and December is likely to see a pick-up in demand as customers rush to buy new cars before the increase in VAT to 20 per cent affects prices.

The news comes as the Used Car Price Index has disclosed that this is the best time in 2010 to buy a used car, as average used car values in August are lower than the same time last year.