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Used cars: Dealers are urged to increase finance sales

He said that in its first full month MotoNovo Finance (Carlyle Finance until two months ago) achieved a record for new business with sales volumes up 33% from the previous best in March 2011 (£51.8m).

Used car finance is a priority

GMAC UK, which provides F&I products for Vauxhall and Chevrolet dealers, is making used car finance a priority as it expands (preferred supplier status with the MG Motor and SsangYong UK dealer networks has been added).

Head of sales and marketing Simon Kington said: “We provide training for dealers.

“There is some difference in the approach they should take with buyers of new or used cars but it is only slight.

“Neither cash nor loan is necessarily the right position, but most used car finance is not manufacturer supported as it is on new cars.”

Kington said dealer training, for used or new sales, was on the basis of customer qualification: “The main objective is to match a customer’s needs with the right products.”

David Challinor, managing director of The Funding Corporation, said referrals were increasing from franchised dealers whose lenders declined advances to used car buyers because of their credit rating.

The company has published a guide for dealers and other referrers who are thinking about working in partnership with ACF Car Finance, The Funding Corporation’s used car retail network.

Darren Greenyer, HPI head of automotive finance said: “Dealers selling used cars should avoid selling used car finance on price alone and should highlight the benefits to customers in terms of safeguarding their credit lines.

“Dealers need to take some responsibility by showing customers the longer term benefits of opting to take motor finance, even if it costs them a couple of extra base percentage points at the time of purchase.”

How hot finance prospects become icy refusals

Franchised dealers selling used cars are politely showing customers the door after they have expressed a willingness to buy one, says David Challinor, managing director of The Funding Corporation.

“It goes against every instinct of the motor professional,” he said. “It is because their preferred finance providers issue hot prospects with icy refusals for a loan.”

Challinor said it was even more frustrating because these declines often came after a dealership’s sales team invested considerable time with a customer negotiating the deal, arranging a test drive and completing a finance application.

“Sales advisers make the mistake of believing they have recognised from the outset that they were dealing with someone with a less than pristine credit record,” he said.

“And that the customer would have known that their credit file would prove an impediment for a loan.

“Both assumptions can be based on false premises.

"The sales person might have in their mind an idea of what a credit-impaired customer looks and sounds like, but I can guarantee that it’s wrong 90% of the time.”

He said the percentage of customers accepted for car-buying loans after referral to ACF Car Finance by dealers is at a 10-year high. In the past two years, approval rates for car buyers introduced via intermediaries have grown by 8%.

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