Regulators Scrutinise Car Loans Amid Fears of New Credit Bubble

The exponential growth it motor leasing plans is causing concerns at both the Financial Conduct Authority and the Bank of England

Emma Simon 30 June, 2017 | 12:10PM

Is the rapid growth in car loans and finance deals a ‘slow motion car crash’ waiting to happen? This is the question being posed by the City regulator – the Financial Conduct Authority (FCA) – as it begins to scrutinise this industry. It emerged this week that the FCA is also in discussions with US authorities about this issue.

The growth of these credit deals also appeared in the Bank of England’s financial stability report – published this week. These noted concerns over the surge in consumer credit over the past five years, pointing out that car finance now makes up almost 30% of this debt. These outstanding car loans are estimated to be worth some £58 billion.

Consumer debt is growing at a rate of 10.3% a year. Within that car finance is growing at 15% a year – this compares to just a 9% growth in credit card debt, and a 7% increase in personal loans.

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About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for Morningstar.co.uk

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