Flexible motor finance will grow significantly in importance as a product should there be a hard Brexit in October, according to Startline Motor Finance.
Paul Burgess, chief executive, explained that consumer confidence is likely to be adversely affected in the event of a hard Brexit. This, combined with the negative impact upon the economy, could have a substantial effect on the UK motor finance sector.
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“It is not a political comment to say that even the best hard Brexit outcome would be bad for the economy and the worst could be very damaging. Almost no economic experts see a positive effect in the short-medium term.
“This is likely to influence all aspects of the used car market and motor finance will not be unaffected. Given historical precedents, underwriting rules are likely to be tightened just at the point in time when used car retailers really need some additional flexibility.
“That is why we believe that the kind of flexible lending that we provide could prove to be an essential part of any dealer lending panel over the coming year and beyond. Because our whole approach is based on a form of underwriting that is more holistic in approach, we will often be able to help when traditional motor finance providers cannot.”
Burgess said that the situation would become even more acute if a hard Brexit caused effects such as noticeably higher unemployment or an increase in defaulting on loans.
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By GlobalData“All of these will impact on used car buyer credit scores which is something that we saw after the financial crisis. There will undoubtedly be a demand for motor finance from people who have encountered these problems and more flexible motor finance is the only solution without turning to the high rates and tough conditions of sub-prime lenders.”
