Why 2026 will redefine UK car finance

Core Insights - The UK's used car market is evolving from a London-centric focus to a national perspective, driven by electric vehicles, regional demand, and new lenders [1] Group 1: Electric Vehicle Impact - The surge in electric vehicle (EV) transactions is significant, with sharp increases noted in 2024 and continued growth in applications for 2025 [2] - Affordability concerns are emerging, particularly with the introduction of road tax and luxury levies in April 2025, which may cool the market for first-time and budget-conscious buyers [2] Group 2: Regional Demand - Growth in car finance applications is outpacing London, with the North West and North East becoming key areas of demand, indicating economic resilience and shifts in ownership patterns [3] - Businesses that focus primarily on London may miss out on the real momentum occurring in these regions [3] Group 3: Changing Finance Landscape - The finance landscape is becoming more competitive with new entrants that are not hindered by legacy systems, focusing on affordability and modern risk models [4] - Incumbent companies face the challenge of innovating to avoid becoming irrelevant in this evolving market [4] Group 4: Future Outlook - The year 2026 is expected to be transformative for the car finance ecosystem, with affordability, regional demand, and new competition converging to reshape the market [5] - Stakeholders who anticipate these changes will be better positioned to capture growth in a rapidly evolving environment [5]