Newly launched motor finance company The Funding Corporation plans to create a network of dealers specialising in sub-prime finance to tap the growing market for loans to customers with poor credit records.
Des Porter, who helped establish the sub-prime market in the UK with Associates, has joined TFC as head of sub-prime. He will launch the company's Green Light sub-prime programme.
"We are looking for 80 to 100 sub-prime finance dealers throughout the country, each one with a dedicated catchment area," said Mr Porter. "We will offer dedicated support for quality dealers who want to put customers with impaired credit history into quality cars."
Mr Porter said his team would be visiting around 11,500 car retailers to explain the Green Light programme. The UK's largest sub-prime finance operator, Direct Car Finance, is believed to be one of the first companies to sign up.
TFC plans for sub-prime to take around 20% of its business as first year loans grow to £100m. Prime vehicle finance - across cars, motorbikes and caravans - will take 60% and the remaining 20% will be on other personal loans. Dealers who introduce a car loan customer will be paid commission on subsequent personal loan business under a new Customer Lifetime Earnings scheme.
David Titmuss, head of marketing and one of the founding directors who split from Capital Bank Motor, said it was well known that existing lenders were selling other financial products to dealers' customers but the dealers themselves were not benefiting from the revenue.
"It's a question of being open about what your business is all about," he said. "We are going to be a multi-product company in the future and we want our dealers to be interested in building our business. We are saying to dealers 'if you want choice, open your doors to us'."
Gerald Grimes, formerly with GE Capital Woodchester has been appointed head of prime finance. He said independent used car retailers and smaller franchised dealers are a "neglected part of the market" as consolidation among larger finance houses continues.
TFC has signed its first affinity deal with AXA Insurance which will also handle the finance house's insurance products. Under the scheme affinity partners will be able to offer their own brand personal finance to members, employees or customers. The Funding Corporation will run the back office.