By Tony Willard
The Funding Corporation (TFC) has closed ACF Car Finance, its branch with five retail sites selling used vehicles on group loans, ahead of a push to increase advances through motor retailers.
TFC plans new products for more franchised and independent dealers, car supermarkets and finance brokers. Though the company makes no reference to it, ACF appears to have been a victim of change – many buyers of used cars now like to seek the best direct finance deals in online searches.
David Challinor, managing director of TFC, said the closure of ACF was to protect the future of the business and avoid wider job losses. The decision was made against the background of unfavourable trading conditions faced by ACF this year.
He said no realistic alternatives to closure had been put forward, and ceasing retail car sales was in the best interests of TFC and its employees. TFC closed ACF in mid-September after a six-week consultation with staff aimed at exploring any possible alternatives to closing the business – none were found. The 55 people who lost their jobs, out of a total TFC staff of 140, worked solely or mainly on ACF.
TFC was formed in 2001 to provide loans for buyers of used cars. Two years later it opened ACF Car Finance, which at the time it closed had outlets at Normanton, Salford, Willenhall, Hemel Hempstead and Bristol.
In November, TFC will launch a new sub-prime HP loan, already trialled by some dealers in north-west England. It will be offered on cars that have covered up to 120,000 miles, and be up to 12 years old at the end of the agreement.
The group expects to be lending against relatively young used cars and/or with a larger engine and higher spec than those typically bought by sub-prime purchasers.
Examples include the Ford Focus, Vauxhall Astra, Audi A3, “beefier” Nissans and the BMW 3 Series. SUVs are also thought to be popular among higher-earning sub-prime borrowers.
Before closing ACF, Challinor said TFC was looking for the most effective way to drive its expansion plans.
“Our new HP product will benefit all non-prime borrowers, including those emerging from past financial problems while still dogged by credit declines,” he said.
The loan requires no deposit. It offers a level of borrowing consistent with a car buyer’s ability to service the loan, plus repayment terms of up to five years, says TFC.
Challinor said: “It will enable car retailers to promote themselves to a much wider market of car buyers who don’t want their choice restricted to the least expensive models. We have structured it specifically for non-prime used car buyers including those whose incomes don’t limit their choice solely to budget vehicles.”