New data from the Finance & Leasing Association (FLA) shows that consumer finance new business grew by 3% in February 2025 compared to the same month in 2024, with car finance demonstrating notably strong performance.

Car finance reached £2,889m in new business during February, contributing significantly to the overall growth in consumer lending.

The consumer finance market has now seen two consecutive months of growth, with the first two months of 2025 showing a 2% increase in new business compared to the same period in 2024.

This contrasts with the mixed performance across other sectors, as retail store and online credit saw a 2% decrease in the same period, while credit cards and personal loans together grew by 2%.

Geraldine Kilkelly, director of research and chief economist at the FLA, said: “Consumer finance new business provided by FLA members continued to grow at a modest rate in February supported by strong performances in the new car finance and second charge mortgage markets.

“The US administration’s tariff hikes have weakened an already soft economic outlook. Uncertainty about jobs and higher inflation in the coming months are likely to weigh further on consumer confidence and spending.

“Our latest research suggests that total UK new consumer credit by value will grow by 6% in 2025, with the credit card finance market increasing by 5%.”

Despite the positive figures for February, the FLA highlighted potential challenges ahead for the automotive finance sector due to economic pressures.

Kilkelly added: “As always, customers who are worried about meeting payments should speak to their lender as soon as possible to find a solution.”

The car finance sector’s strong performance comes against a backdrop of economic uncertainty, with US tariff hikes cited as a particular concern for the UK’s economic outlook.