There have been numerous reports in the press recently discussing finance deals and motor traders, including how many people are now buying their new cars using financing, and the ways in which motor traders protect themselves and their businesses when offering these deals. This is due to the fact that most people in the UK now struggle to buy a new car outright, and so depend on finance deals in order to cover the initial costs and then arrange manageable repayments.
Therefore it is not surprising to hear that there was a twenty eight per cent rise in the number of new cars bought using dealer finance packages compared to January 2012. According to the Finance and Leasing Association, in the twelve months leading up to January 2013 there was also a twenty seven per cent increase in the amount of people buying new cars through finance schemes, and the number of people buying used cars of finance deals in January increased by six per cent compared to the year before.
In 2012 the Finance and Leasing Association provided £23.3 billion to the motor trade industry in order to finance the purchase of new and used cars, and in the twelve months leading up to January 2013 the Associations’ penetration of the new car registrations market increased up to 71.6 per cent. However, whilst finance packages help motor traders increase the sales of their stock, traders must also be wary of which customers they offer these deals to.
Before agreeing to a finance package nearly all motor traders check the credit rating of their customers in order to get a better idea of whether the customer can afford the vehicle and make the required repayments. However, most of the time this is done at the end of the sales procedure, which means that if a customer cannot afford the repayments the dealer would have wasted their time. This is why iVendi has created the Car Finance Checker for motor traders, which provides credit information to dealers so that they can pre-qualify customers at the beginning of the car buying process.
iVendi director James Tew said: “The tool moves the credit checking process from the end of the car buying process to the beginning, meaning that the full dealer sales procedure is only undertaken for customers who can actually afford the vehicle.” Motor traders who offer finance packages need to make sure that they are covered with motor trade insurance should a customer default on their payments for their new vehicles.
