Car finance has provided strong support to the UK car market in recent years, helping the car industry recover from recession and return to growth more quickly than many other sectors. While manufacturer finance and product innovation in the shape of the PCP have helped build momentum and grow new car volumes, dealers are increasingly looking to independent finance providers to augment product choice and liquidity going forward.

Nowhere is this more evident than in the used car market. In this segment, at a time when drivers have both the requirement and the confidence to replace their vehicles, dealers are finding they are short of good quality stock and flexible finance products. As new cars work their way back onto the market over the next 12 to 18 months and the stock shortage begins to ease, we predict strong growth for finance products that can be tailored to meet a wide range of customer budgets by offering flexibility on key contract terms.

Building on this idea of tailored products, we also see an opportunity to develop and grow the market among dealers focused on niche or specialist vehicle types. Often the customers of these dealers are not best-served by standard, one-size-fits-all type products. Working closely with the dealer community, we believe there is real potential for exciting, product innovation in this area.

Alongside growth and innovation, the other dominant theme in the car finance market today is regulation. A key factor in the sustainability of markets is consumer trust. The transfer of consumer credit regulation from the OFT to the FCA gives lenders and dealers a great opportunity to build customer trust and the new regulations should be seen as such. In our opinion, those who are ‘fleet-footed’ and pioneering will lead the way and will benefit from change.

The FCA’s conduct-based regime will place a much sharper focus on lenders and dealers to ensure that their products, systems and processes support fair customer outcomes. As part of the newly-authorised Paragon Bank, we have put this thinking at the heart of our business and embedded new approaches to give dealers and customers greater clarity on product features and financial incentives, together with greater rigour in terms of an assessment of affordability and creditworthiness.

At Paragon Car Finance, we believe that the new regulatory regime will in the long term be good for the industry. It will drive new product innovation, deliver clearer communication and implement consistent approaches across the car finance industry which will, in turn, make it easier for dealers to transact business with all finance companies.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

 

By Julian Rance, Head of Paragon Car Finance