‘Trust, easy access and quick approval’ drive dealer motor finance

Trust, ease of access and quick approval are the key factors driving motor finance at the point of sale.

That’s the finding of a new report from the Finance Leasing Association “The Future of Credit, Finding Out What Consumers Want” which said that dealers in many cases drive the finance sale because consumers are not familiar with the finance supplier.

“Consumers are not very familiar with car finance providers and are likely to go with the recommendation of the dealership where they purchased the car, or another trusted third party.

“Another key factor making journeys smoother is ease of access. For most consumers this relates to credit options being presented to them as a way to pay at the point of purchase. For example buy-now-pay-later options being shown at online checkouts or being offered financing by a car dealership.

“In these instances, credit is a convenient way to pay, it feels simple and straightforward, and consumers do not have to work out if it is ‘right for them’.

The FLA said another factor that consumers – particularly sub-prime customers – like is pre-approval and quick approval.

“For consumers with subprime credit scores, this is a particular concern, and they will gravitate towards products for which they have ‘pre-approval’ to avoid rejection and therefore damaging their credit score or not being able to make an essential purchase.”

Overall, the report the report identifies four principles that would underpin a new relationship between lenders and consumers:

• Greater personalisation – where products are more tailored to individual circumstances
• Greater flexibility – with products that allow more flex on how and when repayments are made
• Greater control – over the choice of products and how they work
• Greater education – more understanding of how lending decisions are made

Stephen Haddrill, Director General of the FLA said: “It’s clear that consumers value credit, which is why the Future of Credit work is so important, but the report also provides real insight for firms as they work on implementing the Consumer Duty.

“We recently brought together firms, consumer groups, regulators and other stakeholders to review the findings from the research and help us shape an Agenda for Change – the plan for which will be published in later this year.

“This is an extremely timely exercise because the Treasury is currently consulting on how to reform the 50 year old Consumer Credit Act that underpins UK consumer credit agreements valued at £207 billion at the end of 2022.

“With change underway in the regulatory framework, the Future of Credit is a great way to canvas opinions from users on how products and the market could be more consumer focused.”

Click here to get the report on the FLA website