Are you buying a used car on finance? Well, more and more people are every month at the moment it would seem - used car finance has risen for the fourth month in a row, the Finance and Leasing Association says. Unfortunately, the new car market is not quite as healthy, based on numbers from the same organisation. However, this is due to the many financial burdens on people, but sites like will save a packet on your insurance.

Finance for used cars grew 7% by value and 11% by volume for October compared to the same time last year - Although these numbers are skewed somewhat by the car scrappage scheme.

While this was running, new car numbers were healthier than they have been for years (The 15% VAT rate helped this out as well), but since that incentive ended the used car market has gone from strength to strength.

In October 2010, new car sales dropped 11% year on year, although this marks some form of watershed as the market was up by nearly 25% on the run-up to October this year. There were also good signs for providers of vehicle finance, with over half of new cars bought privately using finance organised by the dealer for the first time since July 2009 - a sign that people no longer have as much ready cash.

In the business car market, however, things are less stable: Business cars bought on finance fell 11% in October this year compared to last, and they also reported volume down by over 2 thirds for the same period of time.

Paul Harrison, the head of Motor Finance at the Finance and Leasing Association says:

"The continued revival of the used car market reflects a return to 'traditional' buying habits as buyers look to manage their budgets by seeking out affordable cars and finance. Until recently there was a shortage of popular models of used cars and this drove up the price. The end of the scrappage scheme has led to a rebalance of supply and demand. But motor lenders' Christmas cheer will be tempered by the prospect of a tough market in the New Year, as the VAT rise takes effect and public sector spending cuts impact on people’s pockets."

What will be interesting is to see what happens next year: As well as a rise in VAT to 20%, insurance is also going to become more expensive due to a premium tax rise, both of which could potentially affect the new car market. For one, many companies will often offer a year's car insurance for free when you purchase a new car, and with the VAT rise many companies will offer promotional deals at the "original" VAT rate - but at the same time, buying a used car property means you pay no VAT at all, and while the cloud exist you can still save a packet on your insurance...