Tighter Lending Criteria Could Benefit Car Dealers

Mon, 17 Mar 2008



A tightening in lending criteria by UK car dealers, driven by the credit crunch, could provide dealers with increased opportunities to sell their own in-house finance products, a leading breakdown provider has claimed.

RAC Warranty, which has teamed up with The Warranty Group to provide financial services, said that tighter economic conditions have already led to improved penetration of warranty products and that a similar effect could occur in relation to used car finance .

Ian Simpson, RAC Warranty sales and marketing director, commented: "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 suggested that used car dealers had started to realise the benefits of selling a range of financial products in a structured approach, a factor which had been neglected in recent years.

"Although used car sales themselves have fallen, the penetration of warranties and other types of insurance have started to rise," he added. "There is every reason to expect that a concerted approach to selling dealer finance could bring similar results."
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