Potential car finance benefit from credit crunch

Thu, 20 Mar 2008



Despite recent doom and gloom predictions that the car finance market will suffer in the wake of the credit crunch, new reports indicate that in-house car finance products could actually increase in uptake in light of tightened lending criteria.

The credit crunch has provoked many banks, building societies and other lenders to tighten up on how much and who they will lend to, and at what rate . A new study by RAC Warranty found that dealer vehicle finance products could become more popular in the new financial services climate.

The sales and marketing director of RAC Warranty sales, Ian Simpson, was reported as commenting: "Dealers have had a tougher time selling their own finance products in recent years because the High Street lenders have provided extremely cheap loans to used car buyers. However, that is beginning to change. Dealer finance packages are not only looking more attractive from a competitive point of view but the convenience and face to face nature of dealer-based lending could easily gain customers."

Simpson reportedly concluded with positive prognosis for dealer finance: "Although used car sales themselves have fallen, the penetration of warranties and other types of insurance have started to rise. There is every reason to expect that a concerted approach to selling dealer finance could bring similar results."
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