Over recent years finance for both new and used cars has been in decline. Purchasing a car on finance through dealers to 31/10/09 fell by 17% (new cars) and by 16% for used cars (FLA). PoS finance falls over recent years has been in stark contrast to the growth achieved by personal loan lenders, until the credit crunch. Last year the whole situation changed dramatically as the credit crunch bit hard. A number of personal loan providers exited the market altogether, others consolidated and virtually all severely restricted the availability of loans, with most High St lenders only prepared to lend to existing customers.
The point of sale market was not immune from the realities of the credit crunch, but buying a car on finance from a dealership remained available, albeit the number of lenders also reduced, however some organisations have thrived and to the forefront has been Carlyle Finance which recorded growth of over 60% over the last year, working with more dealers than ever before and demonstrating that finance was very much available. Sadly many dealers seemed to have overlooked the opportunity offered by finance based upon the fall in finance sales � the good news is that this opportunity is still there!
- An opportunity missed
- M & S reported that the car scrappage scheme doubled both the volume and value of personal loans approved by M&S Money over the summer of 2009. (31/03/10)
- An opportunity to seize
- The Bank of England reports that personal loans providers will look to secure “better quality” borrowers in the upcoming quarter, it was suggested. The Bank of England’s latest three-month lending report suggested that companies will continue to tighten credit scoring for unsecured borrowing over the course of the year (Bank of England 01/04/10)
- Lenders are focused on their existing customer base rather than on attracting new borrowers (Datamonitor 02/10)
- One in four people in Britain will be looking to purchase a car with the help of an unsecured loan in the next six months. 7.56 million people are expecting to buy a new car between March and August, a rise of 47% from the previous six-month period and 24% of those buyers will be looking to finance at least part of the transaction on credit (Sainsbury Loans 31/03/10)
- The market for personal loans continued to decline in 2008 and 2009. Demand for new personal loans receded throughout 2009 as a result of the economic downturn (please note this may in fact have been more accurately described as �supply for personal loans receded throughout 2009) with the BBA revealing that 13 consecutive months of declines were recorded up to and including the final month of 2009. (Datamonitor 02/10)
Purchasing a car on finance through a dealership has to be seen as being very much OPEN FOR BUSINESS � with every opportunity used to promote finance to every customer; both to inform buyers that they may be able to borrow the money to buy their ideal car (counter to the negative press coverage surrounding personal loans) and to develop F & I as a profit centre.