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Hire purchase car loan targets ‘cash-rich, credit-poor’

By Tony Willard

The Funding Corporation this month launches Inisium, a non-prime HP loan of up to £10,000 for buyers of used and, for the first time, new cars.

The finance product offers “a level of borrowing consistent with a person’s ability to afford and service repayments, plus terms of up to five years with no initial deposit,” said TFC. Cars can have covered a maximum of 120,000 miles and be up to 12 years old at the end of the agreement.

David Challinor, managing director at TFC, said the number of cash-rich, credit-poor buyers was growing rapidly. Mainstream lenders once tended to overlook minor credit blemishes but now “it’s been almost a case of one strike, and you’re out”.

TFC is now dependent for revenue from loans advanced via franchised dealers, independent motor retailers, car supermarkets and finance brokers. In September, it closed its ACF Car Finance used car retail network.

Challinor said: “A large number of people with comfortable earnings and secure employment have their purchasing power capped by restrictions on how much they can borrow.”

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