John Woolley, managing director, says: “We have to make the shift and adopt this new methodology. Otherwise, we face not having a market left to save.
“We anticipate adopting a risk-based pricing approach that will deliver more profit for our dealers.
We will underwrite on individual customer profiles instead of the age of vehicles. This will offer dealers more flexibility to submit proposals for all their customers and have finance deals underwritten.”
AutoRate Plus is running a pilot scheme until early next year, and Black Horse is confident it can then be offered nationwide, making a radical impact on the sector.
“This approach will work across the majority of our products,” says Woolley. “Customers shouldn’t even be aware of any change, as they will be dealt with in the same way as before. What will change is the underwriting process.”
Black Horse is the latest finance company to fight back against the drift of POS finance and insurance sales to high-street banks and direct lenders led by major supermarkets and specialist internet firms.
Black Horse’s strategy stems from last year’s research by the Finance & Leasing Association. The findings prompted the FLA to say “relatively radical’ steps might be needed to revive showroom finance and insurance retailing.
Woolley says more recent research suggests three in four car buyers are “open” to arranging loans for cars through dealers.
“This risk-based pricing approach has helped to stop the decline in dealer finance in other countries across the world. The possibilities are endless.”