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Banks problems open doors for dealer finance

Unsecured borrowing (on credit cards, loans and overdrafts) is rising at its fastest rate in five years.

A sudden drop in the number of mortgage deals available, an increase in the deposits customers have to pay and an increase in energy and food prices might go some way to explaining it.

But, whichever way you look at it, many home owners now rely on credit cards and personal loans just to finance their daily expenses.

And, despite the Bank of England reducing the base rate, many lenders have increased the rates on several of their mortgage deals, and closed the door to new customers.

So, mortgages are harder to come by, and with more than a million people coming off their fixed rate this year, this only increases the pressure on disposable incomes.

The Government is securing banks’ mortgage debts by introducing a bond scheme, and this may go some way to reducing the current bank liquidity problems.

So, what is the point in telling you all of this? Well, despite this, car sales were up in March.

It was a small rise (0.5% on March ’07) but it was still a rise, and it was well ahead of expectations.

Is this the turning point we’ve all been hoping for? In truth, probably not yet, but what’s clear is that regardless of pressures on the economy, and on people’s pockets, they’re still buying cars.

Consumers will continue to face tough times in the coming months, but people will “cut their cloth accordingly”.

What we must remember is that dealer finance has never been more competitive and, because you can offer fixed rate agreements over a fixed term, the price customers see is the price they get, and that’s reassuring.

Stability and certainty are what customers want, and that’s what they will get with dealer finance.

What’s more, loans can be arranged on the spot, applications approved almost instantly, and they’re leaving other credit lines open for everything else they have to buy.

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