The UK used car market has shown resilient demand, with lending volumes rising at the end of 2025 despite ongoing economic pressures.
CarMoney reported an 18% increase in loan volume in December compared with the same month in 2024.
The uplift followed the Autumn Budget and points to pent-up demand returning to the market.
While the rise offers an early boost for dealers heading into 2026, the picture is one of resilience rather than a full rebound, with consumers adapting to tougher conditions rather than stepping away from car ownership altogether.
Alistair Grier, chief executive of CarMoney, said: “What we saw in December was a clear spike in demand following the Budget.
“It underlines the level of latent demand in the market.
“Even with ongoing economic pressures, the signals we are seeing suggest a positive start to 2026 for dealers.”
His comments come amid continued macroeconomic headwinds.
Interest rates remain high, household budgets are under pressure, and consumer confidence, while improving, remains fragile.
However, for many motorists, particularly outside major cities, car ownership remains a necessity.
The used-car market entered 2026 with solid momentum, following a resilient performance throughout 2025.
Cautious but genuine momentum in 2026
Data from Autotrader shows the year ended with an estimated 7.8 million used car transactions, with retail sales on the platform up 2 per cent year on year. December alone recorded a sales volume increase of around 4 per cent.
Despite this, the market remains finely balanced. Supply constraints continue to shape conditions, with a shortfall of around 1.8 million three to five-year-old cars compared with 2019 levels.
Competition for stock remains intense, shifting the balance between retailers.
Independent dealers increased their share of one- to five-year-old vehicles during 2025, while franchised retailers saw their share fall from 70% in 2024 to 68%.
Franchised used car sales were broadly flat, down 0.5% over the year, while independents grew by around 4%. Growth has been strongest at the more affordable end of the market, as buyers manage costs by trading down rather than leaving the market.
These trends support forecasts of a further 3 per cent increase in used car sales in 2026, taking total transactions close to eight million.
Grier added: “The message for the trade is clear.
“The market is not immune to economic pressure, but demand remains resilient, particularly at the affordable end, and the year has begun with cautious but genuine momentum.”
Backed by the Peter Vardy Group, CarMoney has set a target to reach £730 million in annual vehicle finance by 2029.