Used car dealer finance can break through into the finance mainstream as we enter life beyond lockdown, MotoNovo Finance chief executive Mark Standish believes.

In a rapidly changing and increasingly online retailing environment, dealer finance could prove a popular choice amongst consumers, as long as the industry succeeds in winning the “hearts and minds” of consumers, alongside “addressing some of the deep-seated perceptions of the industry,” Standish adds.

According to a statement from MotoNovo, the motor industry has long had a problematic relationship with consumer media regarding used car dealer finance, with the press leaning towards personal loans as a safer and cheaper option.

Two principal consumer guidance websites – The Money Advice Service and Which? Car Finance both argue in favour of personal loans. The former advises customers: “If you’re not paying with cash, you’ll be using car finance or credit to buy your car. If you’re using credit, you’ll get the best deals if you have a good credit score.”

Referring to added-value insurance product, Which? writes: “These products are more cheaply bought independently.”

Guidance from the two influential publications reinforces both the challenges and opportunities for dealers in terms of motor finance.

Following the introduction of new motor finance regulation, which saw a move towards risk-based pricing, Standish understands the difficulties dealers face in embracing the new model. In spite of this, Standish deems the original model as unsustainable.

In a previous statement, Standish reinforced: “While change can present risks, in this case, the risks of not changing, even in the short term, looked far higher. From a regulatory, technical and above all customer perspective, we concluded that for the future well-being of dealer finance, the connection between the borrower and their risk profile had to be recognised.

“Over the last year, we have seen the pace of change. I earnestly believe we can turn this to our advantage by improving perceptions and sales with risk-based pricing. Fixed-rate finance is an option, but at the interest rates I see on dealer websites, I doubt the model can survive for long and doing so risks sustaining the negative perceptions of our industry.”