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Brokers fear effects of online finance solutions

Julian Rance, head of Paragon Car Finance

Paragon Car Finance’s latest Headlight Survey has revealed that finance brokers fear the effects of online finance solutions on their volumes of business in the long term.

While 24% of brokers believe online finance solutions will have a positive impact in 2017, 52% said that they expect online finance solutions to lead to reduced business in the longer term.

Julian Rance, head of Paragon Car Finance, said: “2016 was a big year for new car sales and an increasing amount of this business is done online, often directly via a manufacturer’s own finance products.

“Despite this trend however, it is likely that online purchases will remain largely restricted to the new car market.

“Purchasing a used car online involves much more difficulty and risk than does purchasing a new car and while customers might source used car finance online, it is likely they will still want to check a second-hand vehicle in person before purchase.

“This puts dealers, and by extension brokers, firmly in front of the customer at the point of sale.”

Asked what impact online finance solutions had upon their business in 2016 just under a fifth (19%) of respondents reported a negative impact.

Nearly a quarter however (24%) described the impact as being positive citing benefits from faster decisions and greater efficiency.

Over the longer-term brokers concerns are more pronounced.

More than half of brokers surveyed (52%) said that, long-term, online finance solutions would lead to a slight reduction in business demand.

A further 10% stated that online solutions would lead to a significant reduction in demand.

A further 38% anticipated no impact.

Commenting on the automotive sector’s projected fortunes for 2017 as a whole, Rance said: “We should expect a five to 10% decrease in new car sales throughout the rest of 2017, which in turn could lead to an increasing amount of business going to the used car market.

“As such some of the concerns brokers have about online competition will likely be alleviated over the course of the year.”

 

 

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