Car loan values jump as demand for electric and luxury vehicles grows

Car loans jumped by almost 50 per cent in value in the second quarter of this year, as car prices are on the rise and there is an increasing consumer appetite for electric and luxury vehicles.

Latest figures from the Banking and Payments Federation Ireland (BPFI) show that in the second quarter of 2023, the number of car loans rose by 35.9 per cent year on year to 15,828, while the value of loans jumped by 47.7 per cent to €189 million.

The figures are part of the BPFI quarterly personal loans report, and are the highest volumes and values since the data series began in 2020.

Brian Hayes, chief executive of BPFI which represents the banking, payments and fintech sector in Ireland, said the jump in car loan volumes and values is “significant”.

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“The average car loan increased by €955 to €11,922, suggesting that we are seeing not only rising car prices but also an increased consumer appetite for electric and luxury vehicles,” he said.

“According to the CSO, almost 14,000 new electric cars were registered in the first half of 2023, about 65 per cent more than in the first half of 2022,” he added.

The BPFI report shows that the total value of personal loan drawdowns in the second quarter of this year also reached a record high of €539 million, with a total of 56,385 drawdowns.

Apart from car loans, the number of green personal loans also saw a sharp increase in the second quarter, rising to a total value of €29.3 million across 1,250 loans. Albeit from a low base, this was a year-on-year increase of 174.6 per cent in value and a 137.6 per cent increase in volume.

Green personal loans are those that are classified as “green” by lenders, and can include loans for the purchase of electric and hybrid vehicles or to improve a home’s energy efficiency.

The average green loan was relatively high at €23,419 in the second quarter, compared with the average for all loans at €9,562.

The number of home improvement loans in the second quarter rose by 26.8 per cent year on year to 15,811, while the value rose by 22 per cent to €172 million. These were also the highest levels of activity since Q1 2020.

A total of 24,746 loans for other purposes, including education, holidays and special occasions such as weddings were drawn down, a rise of 22.5 per cent year on year, with values also rising by 22.6 per cent to €178 million over the same period.