Dealers turn to near prime finance
Two out of three dealers (66.1%) believe that near prime finance will become more important to their businesses if there is a recession in 2020.
This is based on new research for Startline Motor Finance. The findings also show that 54.6% say they expect prime lenders to reject an increasing number of applications next year in a continuation of a trend they have seen during the last 12 months.
Paul Burgess, CEO at Startline Motor Finance, said: “I recently read a view of 2020 that said, even if it isn’t technically a recession, it’ll feel like one. There is little question it is going to be economically challenging. To some extent, the used car market is a counter cyclical business and tends to do quite well in these conditions but it can only do so with the support of motor finance companies. This is what will make next year so interesting in our sector.
“Our research shows that dealers already perceive prime lenders as reducing their risk appetites and that this will continue into 2020. In these circumstances, there is a good chance that near-prime lending will come into its own as an attractive alternative.”
The research carried out for Startline showed that 29.8% of dealers already have a near-prime option on their lending panel and 80.7% overall see near-prime as important or somewhat important to their business.
Furthermore, 89.3% of dealers say it is important for near-prime lenders to have a range of products rather than just HP.
This research was carried out by APD Global for Startline’s The Future of Used Car Finance in the UK report and surveyed 57 dealer businesses including franchise groups, independents, car supermarkets and online specialist brokers. The sample chosen was designed to be representative of the dealer sector as a whole. All the respondents were senior managers who had responsibility for used car retailing and finance propositions.
