Motor finance companies could seek new ways to add value

Motor finance companies need to find new ways of adding value and informing customer choice, says iVendi.

Aside from offering the cheapest finance deal, motor finance companies need to find another way to differentiate themselves.

James Tew, CEO, said: “The motor finance market perhaps needs to become a little more like the insurance sector where any number of price comparison web sites will show you the cheapest cover available but consumers often choose a more expensive but attractive option.

“Their reasons for doing this are varied. Perhaps the insurer offers a better deal if you take more than one product from them, their brand is strong and trusted, or they offer a fast and easy application process.

“This sometimes happens in the motor finance sector but more often, hire purchase especially is seen as a commodity product and price tends to rule. The proportion of buyers who don’t go with the cheapest deal tends to be low.”

An independent start rating system such as a defaqto rating to cover insurance, banks and other financial products might be considered in the future.

Tew added: “This would mean consumers looking for motor finance could make an informed choice instead of being faced with what look like identical suppliers, and make a decision that balances cost against a range of other elements.

“Entrants with strong brands coming from other sectors could bundle motor finance with other products and offer discounts and other incentives. It’s all about building a genuine proposition rather than just offering a price.”