The recovery in the new car finance market could be hindered by the ongoing political uncertainty , the Finance and Leasing Associaiton (FLA) has warned.

According to the group, the new car finance market got off to great start this year, growing by 38 per cent in the first quarter of 2010, following a a sluggish 2009.

It revealed more than 95,000 new 10-plate cars were sold on dealer finance in March, an increase of 46 per cent compared with the same month the previous year.

The FLA added that government incentives, such as the cut in VAT, have contributed to the new car finance market growing by 10 per cent over the last year.

Paul Harrison, head of motor finance at the Association, said: The figures for March are encouraging - it is always a strong month for lenders and dealers alike because of the new plate.

We expect the figures for April to continue the strong sales trend, particularly for used cars as buyers return to that market.

He added: If we are to continue building strong financial markets we need stability and the right kind of decisive action from the coalition Government.

The UK economy is recovering from the worst recession since the war, and consumer confidence is still fragile. We hope the new Government will work with us to create a business environment that helps us to help our customers.