Dealers are increasingly realising the need to offer a range of motor finance options online, independent lender Startline has observed.

The company said there is evidence that dealers are beginning to provide a range of finance providers that meet a variety of different customer needs for both hire purchase (HP) and personal contract purchase (PCP).

Chief executive officer Paul Burgess said: “This very much reflects the kind of choices that consumers are already given in other online retail environments. If you buy home or motor insurance over the internet, for example, you will be typically given a choice of dozens, even hundreds, of providers with slightly different policies, payment terms and so on.

“Dealers are coming to the realisation that motor finance is no different. If a consumer is buying a car from them as part of an online retail experience, they expect to be offered more than one online motor finance option, and dealers are starting to meet that need.

“Obviously, it is impractical and probably counterproductive for car retailers to offer the kind of choice that might be seen on an insurance comparison web site, but we are starting to see situations where there might be perhaps three hire purchase providers and the same number of PCP providers, meeting different risk profiles and so on.”

Burgess said dealers were keen to offer its finance products to meet the needs of the increasing number of customers who do not meet the requirements of established prime lenders but remained strong credit risks. These had often been rejected, not because they could not afford the vehicle, but for reasons reflective of current social trends such as their work patterns or lack of home ownership.

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“Our research shows that there is a relatively large group of people who fall into the flexible prime category – around 20% of used car buyers – so there is a strong incentive for dealers to meet their requirements.

“This is part of a longer term trend where the motor finance market is moving away from its old, binary prime/sub-prime model to a range of risk based on several different types of borrower. In the showroom, this trend has been underway for some time and it makes sense that it is also moving online.”