Vehicle finance brokers holding up

Adam Tyler finds that despite market unease, vehicle finance
brokers are still writing business – although some funders are
starting to change the rules of the game.

Earlier this year, the National Association of Commercial
Finance Brokers (NACFB) held a Networking Day for its members and
patrons (lenders, lessors, and factors) to get together and talk
business.

Unlike vehicle finance brokers who are only just (possibly)
starting to feel some impact from the now infamous ‘credit crunch’,
many leasing and commercial mortgage brokers have been suffering
since the end of last year. The picture from vehicle finance
brokers in general seems to be more positive than the one painted
by their counterparts in other parts of the commercial finance
industry – although that’s not to say that vehicle finance brokers
are not affected by the slump.

But currently the picture for vehicle finance brokers is largely
positive. Speaking to members at the Networking Event, vehicle
finance brokers explained that although some lenders were
tightening their criteria or raising their rates, they were still
lending. One broker explained that he had experience of a funder
raising the cost of borrowing, midway through a deal. He explained:
“All cars now have a lead-in time of at least twelve weeks because
even basic models have so many possible added extras and options
available that suppliers carry very little stock.

“One problem came up where a conditional sales agreement
contract has been agreed with a funder, but in the in the time
between placing the order for the car, and the car arriving for the
client, the funder had increased the rate for the finance. There
has always been a paragraph in the quote from the finance company
about how this quote is only available for 14 days but it’s never
been enforced. Now it seems that funders are actually exercising
the option to change the terms of a deal.

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“Obviously it puts me in an awkward situation with the client
when I have to explain that the car had arrived – but he’d have to
pay more for it than he’d originally thought.” Despite this problem
(which he stressed remained a one-off at this point) he said that
business levels remained good, and contract hire business was
unaffected.

Another member said that he had noticed that funders were
tightening their criteria, but that at the moment business levels
hadn’t suffered any kind of impact. It would be nice to think that
the impact on the vehicle finance sector remains at its current
level: a hassle rather than business-threatening catastrophe.


The author is chief executive, NACFB