Less than 2% of the UK car finance market by value would be considered subprime lending, research has revealed.
According to a study produced by Apex Insight, sub prime finance only occupies a thin slice of the market, squeezed between bank-owned car lenders and manufacturer’s financial services divisions, which hold 51% and 47% of share respectively.
Captive finance companies, such as Volkswagen Financial Services and BMW Financial Services, lend around 47% of dealer car finance to consumers.
Large bank-owned car lenders, including Black Horse and Santander, who the report notes do not offer sub-prime finance, lend around 51%.
A range of smaller, mostly non-bank, lenders including specialists in customers with issues with their credit history, account for the rest of the market.
The research examined the financial accounts of the country’s top 30 car finance companies and looked at the value of the cars against which the agreements were made. It also looked at the used car finance sector and found that among independent dealers, only one in five used vehicles is financed, compared to one in three for franchised dealer sales.
Lenders Zopa and Moneyway announced that they were moving away from the subprime sector to shed risk from their portfolio. Zopa cited a worsening in consumer credit conditions, after a period of improvement between 2010 and 2016.
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