Prime lenders appear to be tightening their lending rules says Startline.
This comes at a point in time when used car retailers need greater flexibility from their motor finance, as lenders respond to an economy that is “starting to stall”, acco4rding to Startline CEO Paul Burgess.
“In many ways, this is to be expected. Motor finance is a risk versus reward business and, in times when the economy is starting to stall, lenders often respond by making their approach more stringent.
“However, what we are finding confusing is that, as a flexible lender, we have not seen any change in our own default rates and our lending rules are remaining much the same, with just normal, regular adjustments.
“It is unfortunate that, at a time when used car retailers really need their primary motor finance providers to be comfortable with the current situation and support their sales, they appear to be instead taking a step backwards.”
Burgess highlights that there should be other options available to dealers that fall just short of “prime” status.
He said: “It makes no sense and is unfair that buyers who fall slightly below prime lender requirements very often end up using what we describe in the industry as a ‘sub-prime’ offer. There should be other options.
“We believe that, with a shifting social and economic landscape signifying changes in home ownership and employment patterns, that a move towards products like ours makes absolute sense.
“What we do at Startline is treat the applicant as an individual. Of course, we have some hard lending rules but in areas where other lenders take a black-and-white approach, we will take a look at each individual in more detail and, as a result, are able to offer APRs and terms that are comparable with traditional prime lenders.”