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Finance focus: Seize the moment

The decline in motor finance volumes is well documented. It’s a continuing trend with increased average balances masking a dramatic fall in used car finance case count according to recent FLA figures.

As we start one of the busiest periods of the year, the pressure is on from increasing interest rates to maintain car sales volume and there may well be a knock on impact on sales margins. In light of this, income from finance will be even more important.

Offer finance to every customer – no exceptions. Most consumers will require finance; dealers have access to very competitive rates; underwriting is fast; and the additional income is probably more valuable than ever before.

Centrally customer acceptance on a secured finance product, such as HP, is typically higher than unsecured finance, so you have a good chance of helping the average customer.

The rising interest rates designed to slow down an economy that has become overheated by a combination of rising house prices and access to easy credit are designed to slow consumer spending – they are. There is a wider increase in bad debt and as a result personal loans underwriting has become tighter, which will increase the number of declined applications. This situation is set to continue and may even accelerate.

Dealer finance is not immune from increasing bad debt, but the secured nature of HP mitigates bad debt to a certain extent to the benefit of you and your customer.

Seize the moment; ensure every sales person offers every customer finance properly and professionally. You could be helping them and you will certainly be helping your bottom line.

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