Car finance change could hit poor consumers hardest

Tue, 13 May 2008



Low-priced car loans, like cheap mortgages, are swiftly becoming a thing of the past. Cheap car loans to buy second-hand vehicles were one of the only ways for those with a low income or adverse credit history to afford a car . The largest financer of sub-prime car loans, Welcome Car Finance, decided earlier this month to step back from selling finance through car dealers .

Welcome will now offer loans through their own outlet. The managing director of Welcome Finance (the parent company of Welcome Car Finance), Greg Stevens, was reported as commenting: "Why would we help other dealers make money from selling cars and loans when we can make more doing it ourselves?"

Expert opinion is that the Welcome decision will hurt the market, with many consumers unable to find alternative finance. The founder of Car Credit Complaints, David Gregory, reportedly commented: "Most of the sub-prime car market relies on Welcome, so many dealers - perhaps 60-70% - will find this a devastating blow. Consumer choice will also suffer. Whereas those with a poor credit rating could previously turn to hundreds of dealers, they will now only be able to chose between the dozen Welcome dealerships."
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