There has been some upward movement on the cost of protection insurance with HSBC rates increasing by around 0.5% but competition is keeping rates down.
However the market is moving against the banks and direct lenders. High street rates are looking increasingly uncompetitive as carmakers promote 0% finance on selected models. With most customers offering a trade-in, 40% deposit and 0% over two years can look attractive.
Dealers should be making full use of promoted finance rates to not only close the sale but also keep other F&I business in house - not walking down the high street. Dealers should be able to match, and beat, any offer from the big name banks and direct lenders.
Remember, the headline rates of 8.9% usually advertised by high profile direct lenders such as Alliance & Leicester or Tesco, are available only on loans of £10,000 or more. For a more typical car loan of £5,000 the high street APR rate is likely to be anything from 11% to 13% which can be easily matched by a manufacturer's captive or your independent finance house.
All the evidence suggests customers still prefer to buy a car and arrange finance at the same time.