How Many New Cars Are Bought With Loans?

The 5.3% rise in new car registrations in the UK (to 2,044,609 vehicles) is an economic indicator of some kind, but what type? Is it an indicator that the economy is finally recovering, albeit slowly? Or is it a leading indicator that after a few years of poor sales the car industry is now doing all it can to persuade people that now is the time to buy a new car as opposed to second-hand one? The interesting aspect of the data is that Private sales are also up and represent 45.5% of the total. What we don't know though is how these private purchases have been funded. If, as is entirely possible, the majority have been funded by loans of some description then that only goes to increase individual and family debt which is the last thing people need.

Individual and family debt means that any increase in income goes on paying off the debt which does nothing for the benefit of the individual or family and at the same time has a neutral impact on the economy of the country. That is, of course, providing the debt starts to get paid off and that can be a big if unfortunately. When debt levels of individuals and families are low or zero, increases in income can have a positive impact on the individual/family in that they can choose to save or spend. Either way, that will have a positive impact on the economy. What any country needs is for that income to be spent 'at home' as opposed to on goods from overseas. The more that happens, the more the economy can recover - but it does take time.