Changes to car finance commission models provide a unique opportunity for all dealers to embrace online car finance, according to Auto Trader.
The automotive industry is currently implementing guidance on ‘financial incentives’; published last year by the Financial Conduct Authority (FCA). The FCA’s consumer credit rules mean that commission paid to dealers must reflect the time and effort put into selling finance to consumers.
Independent research commissioned by Auto Trader found that only 15% of surveyed dealers currently displayed finance offers on their website, despite FLA figures showing that 76.1% of consumer new car purchases were bought using dealer finance in 2014. However, 45% of surveyed dealers said they were likely to move their finance offers online.
Auto Trader head of motor finance Paul Harrison (pictured) said: “Car finance providers are already amending incentive programmes to align them with the FCA’s rules and that’s a positive move for dealers.
“Fixed fees and standardised interest rates will help encourage best practice in showrooms and ensure that consumers are guided to suitable finance products.
“Changes to incentive programmes will result in simpler and more transparent finance offers which, in turn, should translate more effectively to a dealers’ online showroom than has been possible previously.
Given just how important finance is to dealer profitability, those dealers who transparently present their finance offers online will help reach a bigger audience and maximise their potential buyers.”
gezza06 - 17/02/2015 09:54
Think they're mixing up new and used here. Fixed fees and standardised interest rates have been around for years on new cars and most manufacturers show them on their websites. These are almost all low rate offers hence 76% take up. Used rates are always higher so a lower penetration but the new rules should see a better take up as generally the exorbitant doc fees have been removed thus reducing APRs. It just depends on how high the standardised rates are.