Car loans surge to a record average of €13,267 on demand for electric vehicles

Car loans accounted for 19,552 of the 60,770 personal loans issued in the first three months of the year — an increase of 21.5% compared to last year

There were 19,552 car loans drawn down between January and March valued at a combined €259m. 

The volume and value of car loans hit their highest levels on record during the first three months of the year, as the number of personal loans issued by the banks increased by over 22%, new figures from the Banking and Payments Federation, Ireland (BPFI) show.

The data shows growth was recorded across all loan categories compared to the same period in 2024, as European Central Bank interest rates have steadily declined since June of last year.

A total of 60,770 personal loans were drawn down between January and March this year, worth a combined €683m — representing a year-on-year increase of 22.1% and 24.1% respectively.

The average personal loan value rose by €177 in that time to €11,239.

Car loans accounted for 19,552 of these personal loans — an increase of 21.5% compared to last year. The combined value stood at €259m — up 25%. 

The average car or auto finance loan increased by €366 to €13,267. These are the highest levels for car loans since the BPFI began this series in 2020.

Head of sector research and analysis at the BPFI Anthony O’Brien said continued growth in the sale of electric and plug-in hybrid electric vehicles “is likely contributing to these increases” in car loan volumes, but these figures also include loans for second-hand cars.

There were 15,372 home improvement loans issued during this period, an increase of 18.2%, with the combined value increasing 19.2% to €198m. 

The average home improvement loan increased by €116 to €12,886.

The “other” category of personal loans saw 25,846 drawdowns during the first quarter. These loans encompass spending on education, holidays, and special occasions.

The number of these loans increased by 25% with values rising by 27.5% to €226m. The average loan value for other loans increased by €170 to €8,725.

There were 1,531 drawdowns of green loans as well — an increase of 29.3% — with a combined value of €35.1m. The average green loan rose by €474 to €22,906, more than twice the value of the average for all loans of €11,239.

Green loans are classified by the bank and can be used to pay for home environmental improvements, energy efficiency improvements, or even the purchase of electric or hybrid cars.

Mr O’Brien said in the 12 months to the end of March, 240,423 personal loans were drawn down valued at almost €2.6bn.

“This was more than double the value in the 12 months ending quarter one 2021,” he said.

The substantial increase in personal loans during the start of the year came as interest rates continue to decline.

Since June last year, the ECB has been going through a process of cutting interest rates. During the first quarter of 2024, interest rates were at their peak and it wasn’t until June of that year did they start to be reduced.

By the start of 2025, interest rates were cut by 1%, with another 1% as of June this year.