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With the recent news that UK consumers owe over £1 trillion, Miles Roberts,
Managing Director at specialist motor finance company Southern Finance, is
urging the motor industry to do more to help ease this burden.
As the motor trade offer even greater incentives for consumers to take out
finance packages in a bid to fuel sales, Roberts is calling for the industry as
a whole to work together to avoid problems down the line.
He commented: “The motor retail sector and motor finance industry need to take
more responsibility. We cannot keep lending more money to more people on longer
term deals and expect there to be no fall-out.
“We have all made it too easy to give customers finance and are only serving to
saturate the marketplace. Long-term deals coupled with low rates might seem a
great sales tool but could lead to problems in the long term for both the
industry and the customer.”
Consumer buying patterns show that most people change cars every two to three
years but with dealers now offering loans over as long as seven years, Roberts
believes they could be risking losing customers for the long-term.
“A longer-term deal may help clinch a bigger sale now but effectively removes
that person from the dealer’s pool of business for up to seven years," he
explained.
"Few people will keep a car that long, meaning that they will run the risk of
negative equity if they decide to trade-in their vehicle early.
"A customer trapped in negative equity is not good for anyone.
“I believe a more flexible credit assessment, where the agreement and the buyer
are assessed on their own merits, is a much fairer way of assigning credit.
"At Southern Finance, we look beyond simple credit ratings by examining the
history of the customer, their total borrowings and the type of deal the
customer is looking for.
"This takes into account the full extent of a consumer’s debt liability,
including their mortgage repayments which means we can be much more responsible
about who we lend money to.”
Source:
Getting Paid
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