The latest Bank of England (BOE) report outlined that In 2017, UK secured finance to acquire vehicles totalled £44bn. In the same year, UK unsecured lending reached £300bn of which auto finance accounted for £58bn.
Changing appetites towards risk in unsecured lending look set to continue, opening up opportunities for used car dealers to tap into a £58bn market opportunity, driving sales and increasing the value of used car finance.
Recent evidence from the Bank of England shows that unsecured personal loans providers have significantly tightened their underwriting, and MotoNovo Finance is leading a drive to help dealers maximise the opportunity this presents.
The Bank reported earlier this year that the availability of unsecured credit had decreased significantly, with lenders reporting ‘credit scoring criteria for granting both credit card and other unsecured loan applications [had] tightened significantly.’
Now, the recently published Q2 report4suggests that this trend shows no signs of slowing down. The availability of unsecured credit to households is reported to have been unchanged in the second quarter of the year and is expected to decrease slightly in the months to follow. Credit scoring criteria for the granting of unsecured loans are reported to have become significantly harder in quarter 2 and notably, the proportion of applications has increased significantly.
Here is a clear opportunity for dealers to gain a greater share of the used car finance market where unsecured loans have historically led the way, and we are on a mission to help more dealers to bridge that gap. While dealer finance is not immune from tightening credit conditions, the reduced credit risk associated with secured dealer finance could make credit proposals more likely to be accepted when compared to a comparable personal loan.
Around 90% of private new car buyers choose dealer finance. That fact alone goes to show the potential opportunity awaiting used car dealers. It’s now about winning the hearts and minds of used car buyers; the availability, convenience, and competitive nature of dealer finance need to be made clear to them.
Technology is the answer to bridging the gap and educating consumers on their used car finance options.
Consumers still rely on traditional forms of lending, like personal loans, because the process is familiar and accessible; people are used to dealing with their finances through their bank. But buyers are increasingly turning to online options that make their lives easier, and capturing used car buyers digitally could really disrupt the market.”
Our vision for findandfundmycar.com puts the consumer in control and enables a simple online journey that incorporates creating their own finance deal. The win for the dealer is in the chance to secure a car sale and a finance sale.
Mark Standish, CEO of MotoNovo Finance