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Carmakers keep finance offers reflecting normality

The landscape for finance offers is looking very different, if not slightly redundant for a market that is all but on pause.

Interestingly, despite the temporary closure of showrooms, manufacturers have updated their Q2 offers, either as part of a way to keep a sense of normality during these unprecedented times, or perhaps more as a vote of confidence that some restrictions may be lifted before the end of June.

The Department for Business, Energy & Industrial Strategy (BEIS) confirmed on April 22 that online sales and home deliveries can continue during the lockdown and the Financial Conduct Authority (FCA) has finalised how finance companies should deal with those customers in financial difficulty due to the coronavirus pandemic.

This includes a three-month payment freeze facility and there must not be any altering of PCP or PCH agreements in ways that are unfair, such as trying to recalculate PCP balloon payments to reflect likely car value depreciation.

If a payment freeze isn’t in the customer’s best interests, manufacturer banks should offer an alternative solution, potentially including the waiving of interest and charges or rescheduling the term.

AM’s quarterly data tracking 233 representative examples online does show a 2.6% increase in the average monthly price of offers quarter-on-quarter from £344 up to £353 in Q2.

It marks the first time finance offers have become more expensive in the past three quarters, ending what had been a continuing downward trend.

It’s an odd time to start ramping up monthly payments while many in the UK are either furloughed and or experiencing financial pressure.

Almost two-thirds (64.6%) of Q2 offers were at or below the average £353 monthly price point.

The percentage APR rate has come down slightly from 4.2% to 3.9% on average, as have deposit levels by 3.3% to £5,654.

This article was first published in AM magazine on May 22

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