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Higher U.K. Car-Finance Defaults Add to Consumer-Credit Risk

  • FCA says increase is driven by buyers with lower credit scores
  • Personal contract purchase deals have helped fuel growth
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Default rates in the U.K. car-finance market are creeping up, adding to regulators’ concerns over the risks posed by consumer credit.

The Financial Conduct Authority said on Thursday that the increase is driven by buyers with elevated credit risk, despite low interest rates and economic growth. These consumers account for about 3 percent of lending, the FCA said in a report. Overall, arrears and default rates remain low.