Friday, December 19, 2008
Lenders 'Cherry Picking' to improve margin
Independent automotive funding provider Southern Finance does not believe threats to banks by Government ministers will change their attitudes to loans for car purchase this winter.
Miles Roberts, managing director, said: “Over the last few months it has become increasingly difficult for lenders to raise enough funds at a competitive margin.
“The upshot has been cherry-picking of the most profitable deals.”
Chancellor of the Exchequer Alastair Darling and business secretary Lord Mandelson have urged banks to make money available to help kick-start the economy.
This follows massive government intervention to
provide tens of billions of pounds to safeguard inter-bank ending.
Roberts said the crucial question of liquidity, plus consolidation, meant the finance sector would probably never be the same again.
“The range of choice for point of sale finance has reduced significantly,” he said. “For motor retailers, this means only the very best customers are going to get it.
“So they’re either going to go elsewhere for the finance – such as with personal loans – at a loss of income for dealers or they’re not going to buy at all, which is an even bigger loss of income.”
Roberts said it was vital for dealers to choose a motor finance partner carefully, and not just to go for the best rate and commission.
“Make sure you understand the lending criteria and the appetite for risk, too.”
Rival Carlyle Finance is in defiant mood, with chief executive Mark Standish saying sales are more than 20% up on 2007, and further growth is planned in 2009.
“We’re working ever closer with our dealer customers to help them face today’s challenges,” he said.
Standish is urging dealers to be positive, asking them to consider how serious a 1.25% downturn (equivalent to UK GDP’s likely figure) would be to their businesses.
He said finance was still available from companies such as
Carlyle Finance, part of WesBank, South Africa’s largest car financer.
DATED: 19.12.08
FEED: AM