Increasingly tough economic conditions in 2018 could lead to a boost for flexible motor finance, which is designed to sit alongside traditional prime lenders on dealer panels. Startline Motor Finance says that, as the effects of a slowing economy start to be felt by individuals, fewer people will tend to be able to meet the conditions put in place by established prime lenders.

Startline Motor Finance CEO Paul Burgess said: “Next year looks set to be perhaps the most economically unpredictable that we have seen since the onset of the credit crunch. Brexit, levels of consumer credit and the general economy all look set to create a degree of uncertainty. Those who have been in the motor industry for a while can testify from experience that these kinds of conditions can actually be good for the used car sector. More people move out of the new market and create additional demand for quality, preowned stock.”

“However, for dealers to make the most of these opportunities, a rethink of their approach to motor finance is required and this is where more flexibility is coming into its own.”

Burgess said that too often the dealer view taken of the motor finance sector split the market into simple prime and sub-prime categories. “For dealers whose panel does not include a near prime lender, the drop from prime to sub-prime is vertiginous with the APR rate rising by as much as double figures. In a used car market where the lending appetite of some motor finance providers is likely to be changing rapidly and where customer circumstances are similarly undergoing upheaval, dealers need to innovate to meet customer needs.”

“Our approach instead is to take a closer look at the circumstances of the person making the finance application, often entering into a dialogue with them and with the dealer. The thinking is that if we can gain an understanding of that person’s overall financial position, then we can potentially work to arrive at a solution that meets their needs.There are all kinds of ways in which the factors traditionally used to credit score people no longer apply to many who are actually very solid applicants. These include the decline in home ownership, the rise in contract and temporary working, and a host of other general changes to overall economic circumstances.

“All of these would place them outside of the scope of a prime lender but, in many dealerships, the only other solution is a sub prime. Instead, Startline’s flexible finance products provide a further option. Going into 2018, with all the uncertainty that it may bring, having this additional channel could be very important for dealers and their customers.”