Motor Finance asked a number of vehicle finance brokers for
their views on the current market; this is what they said
The brokerages we surveyed ranged in size from three employees
to over 130; the majority placed business both for fleet and
individual customers. Of those that worked in areas other than
vehicle finance, equipment finance was the most popular (25 per
cent), although commercial mortgages, investments, pensions, marine
and aviation finance were all mentioned as other avenues
explored.
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All respondents offered a range of products, with personal
contract purchase, personal contract lease, contract hire and
contract purchase the most frequently mentioned. Finance lease and
motor loans were less common.
Crunch tightens its hold
Respondents reported differing experiences of the credit
crunch’s after-effects. Around half reported that it had caused
business to fall; the remaining responses were fairly evenly split
between ‘no change’ and ‘higher volumes’. Two respondents said that
demand was unaffected but that their ability to place business had
been impaired due to funders’ timidity. “Consumer demand has
remained static but our ability to place business has been
restricted,” one said.
Underwriting criteria were universally described as
“tighter”, even if, for some respondents, only “marginally” so.
More conservative valuations and lower residuals were noted, along
with “restrictions on loan-to-value [ratios]”. The Consumer Credit
Act changes were thought by one respondent to be a pertinent factor
in causing criteria to tighten. As to whether underwriting
standards were predictable, around three-quarters agreed that they
were – although this response was often qualified by “on the
whole”.
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By GlobalData A large majority (86 per cent) said that the current
squeeze on credit made funders less likely to use brokers.
Internet: A viable channel?
All respondents had at least a token web presence. However, the
web’s utility to brokers was questioned, as with only two
exceptions respondents said that volumes of business sourced via
the web were either “nil” or “negligible”. One made the distinction
between fleet business – which came “only” through the internet –
and point of sale, which was transacted entirely offline. And 88
per cent did not advertise their offers on third-party
websites.
In all, brokers report that funding is harder to come by –
a worrying sign of the times. And with most financiers apparently
“unwilling” to ‘think outside the box’ when it comes to funding
decisions, brokers will have to fight hard in order to
survive.
A BROKER’S VIEW
Martin Brown, Fleet Alliance
We have enjoyed a record quarter, and our April figures are
looking similarly healthy. I haven’t seen any impact of the credit
crunch on vehicle finance brokers – our main funders are backed by
large banks and their appetite for new business remains strong.
We have seen no evidence of lenders tightening their criteria or
requesting further information in our vehicle finance business,
although our leasing and asset finance arm is seeing some of these
changes. That’s not to say that the vehicle finance business won’t
experience some kind of downturn in the coming months – but all the
signs at the moment are extremely positive and long may it
continue!
Motor Finance Issue: 43 – May 08
Published for the web: May 23 08 14:5
Last Updated: May 23 08 15:5
