Finance companies providing loans for cars are no more wary about bad risks than they were six months ago, said Finance & Leasing Association (FLA) director general Stephen Sklaroff.

“Our members have robust procedures in place to identify potential risks,” he said.

Because of economic uncertainty FLA members were exercising greater caution. But criteria had not generally been tightened.

“This is because point-of-sale finance is usually secured against the vehicle, which represents the finance company’s security in case of default,” Sklaroff said.

“The priority for finance companies is to determine a potential customer’s ability to make repayments.

Underwriting is key to assessing the value of a vehicle and the risks posed by a customer, based on their credit history.”

FLA statistics showed the motor market has not yet suffered a downturn following the credit crunch.

Members financed more cars last year than in 2006, and so far there have not been significantly lower volumes this year.

“We will be monitoring developments carefully in the remainder of 2008,” said Sklaroff.

The FLA’s Specialist Automotive Finance (SAF) project continues to grow and Sklaroff said new dealerships were registering every day.

More than 4,600 industry staff have now registered for the online competence test and more than 3,200 have passed.

“We are examining how best to develop SAF to allow dealerships, and not just individual staff, to gain SAF certification.”

He said. “SAF is helping to raise awareness of the benefits of point-of-sale motor finance.”

Dealerships can sign up to the SAF competence test, free of charge, at this link.

RAC Warranty is also urging dealers to be receptive to training to help them increase sales of finance and insurance products to help cushion the effects of the credit crunch.

Ian Cooper, RAC Warranty sales director, said tighter economic conditions were already leading to higher sales of warranty products.

He thought the same could apply to finance for used cars.

RAC Warranty sells ‘white label’ F&I products provided by the Warranty Group.