Gaurav Jain, UK commercial director, Get Your Car, Carwow, discusses the opportunities for dealers as car buyers seek more guidance on finance options

The decision by the Financial Conduct Authority (FCA) to investigate car finance discretionary arrangements has resulted in significant coverage in national media, and our research indicates consumers now want more information when it comes to finance.

We explored consumers’ expectations regarding the selling of car finance following the FCA’s announcement and what they wanted from dealers. Perhaps predictably, we’ve found that prospective car buyers now want greater transparency on car finance options.

When asked what they would like to see changed regarding car finance, more than half of motorists (56%) said they want “more guidance from dealers,” while nearly three in four (77%) said they would like “more transparency from dealers.” 

It is also apparent that there is a great deal of uncertainty around the topic amongst consumers, presenting a clear opportunity for dealers. For example, when asked if they were aware of the recent news concerning the potential mis-selling of car finance, nearly one in four (24%) answered: “yes, but I don’t understand what happened.” 

The recent headlines could be impacting consumers’ consideration of car finance, with 26% indicating they are “now less likely to consider” a finance agreement via a dealer. This is a significant figure, given that between 80% and 90% of private buyers currently rely on finance agreements to fund their vehicle purchases, according to the Finance and Leasing Association.  

Disadvantage

Our survey also indicated that car dealers could face more questions about finance over the coming weeks and months. Discretionary commission arrangements have been banned since January 2021, but many prospective customers might nonetheless believe they could still be placed at a disadvantage through a new finance deal.

Given that the FCA won’t provide an update on the outcome of its investigation into potential historical mis-selling until September, we would encourage our dealer partners to take all available opportunities to guide and reassure prospective buyers who might be considering car finance.

Dealers will win by engendering trust and loyalty through openness, proactivity and by welcoming questions. They have a huge opportunity to guide, inform and evidence the steps that they are taking to safeguard the interests of customers when it comes to car finance, not least because that also fulfils the FCA’s new Consumer Duty introduced last summer.

For example, once an enquiry comes in - for example through Carwow - it can initiate a tailored contact plan explaining different finance options and their implications. Through a series of email communications, reinforced by face-to-face interaction during any visits to the showroom, dealers can build the consumer’s knowledge and understanding. Those omnichannel touch points also provide opportunities to evidence the fact that guidance has been provided and that the customer has understood.

We are doing more via our own platform to help customers understand finance options. For example, we are integrating finance calculators across more brands so customers can get a view of different finance options before enquiring. But, like many retailers, we can and should do more to support consumers as awareness of the FCA investigation gathers momentum over the months to come.

Gaurav Jain is UK commercial director, Get Your Car, Carwow