Research from AA Car Finance forecasts that motorists will buy more than 1.5 million previously owned cars by the end of 2023, a 69% rise from 10 years ago.

A total of 388,309 second-hand cars were bought on finance in the first three months of 2023, up from 379,512 the previous year.

If the current trend continues that would equate to £23bn being spent on used cars in the UK, compared to £9bn paid in 2013.

Number of loans higher, but average amount borrowed is less

Although the total number of loans is predicted to hit record highs, the average amount drivers are borrowing for second-hand cars is lower than the first three months of 2022.

Around £15,744 on average was borrowed to purchase a used car in the first three months of 2022, while, in the same period this year, drivers are taking out £14,913 on average.

Experts attribute this drop to vendors requiring larger deposits as lending criteria becomes stricter while interest rates rise.

Overall, the average loan car value according to AA Car Finance has dipped slightly from £12,510 to £12,482 this year.

Tighter lending criteria means used car value decreases

Reacting to the potentially record-breaking figures, Mark Attwell, director at AA Car Finance, said: “The popularity of used cars continues to rise, and consumers are increasingly turning to finance to make purchases due to squeezed incomes.

“A fall in the average amount of finance per vehicle is likely to be due to tighter lending criteria and more stringent affordability checks. Many motorists may find that they need to put down a bigger deposit this year to get a similar finance deal.

“Despite soaring interest rates, there are still good value finance deals on the market, so make sure you shop around online before committing to a package.”