As the cost-of-living crisis continues to impact households nationwide, it’s no surprise that consumers are becoming more cautious about their finances. One area where this is particularly evident is in the world of used car purchases. Recent data and analysis from AA Car Finance reveal that motorists are borrowing 5% less for used car purchases this year than the previous year. This article will delve into the implications of this drop in loan amounts and provide valuable insights for car finance intermediaries, such as dealerships and brokers.
In this article…
The Changing Landscape:
According to AA Car Finance, the average loan amount for used car purchases in the UK was £13,239 from January to August 2022. This was sufficient to acquire popular models like the Vauxhall Astra, Fiat 500, Vauxhall Corsa, Ford Fiesta, Ford Focus, Vauxhall Mokka, and Nissan Juke. However, in the same period in 2023, the average loan amount decreased to £12,532. This decline in approved loan values has consequences, making some sought-after models, such as the Mokka, Juke, and Focus, less accessible due to rising prices.
Understanding the Impact
The cost-of-living crisis has undoubtedly taken a toll on the financial stability of many UK households. Mark Attwell, the director of AA Car Finance, acknowledges this reality, stating, “The cost-of-living crisis has hit motorists hard, and many finance companies have made it tougher to get loans to protect themselves.” This statement reflects the caution finance companies exercise to mitigate risks in a challenging economic environment.
Tips for Car Finance Intermediaries
For car finance intermediaries, staying informed about these changing trends and adapting your strategies to serve your customers better is essential.
Due to the ongoing cost-of-living crisis, the automotive industry is witnessing a significant shift as customers borrow 5% less for used car purchases. Adapting to this changing landscape is crucial to maintaining sales and profitability for car dealerships.
Here are some tips to help you stay ahead:
- Diversify Inventory: Expand your inventory to include a wide range of used car models to cater to different customer preferences and budgets. A diverse selection of vehicles on your lot can increase the chances of customers finding a car that suits their needs and price range.
- Competitive Pricing: Set competitive and transparent prices for your used cars. Highlighting attractive pricing options can motivate customers to purchase without needing to shop around extensively for better deals. Additionally, offering competitive financing rates can sweeten the deal.
- Provide Financing Options: Offer a wide range of financing options via partnerships with reputable lenders. This allows customers to secure financing quickly and efficiently, eliminating the need to explore other financing sources. Emphasise the convenience and competitive rates of your financing options. Do you have a lender on your panel that offers non-prime PCP? You probably don’t, as only two lenders in the UK offer this and Marsh Finance is one of them. Contact us today to find out more.
- Highlight Vehicle History Reports: Provide detailed vehicle history reports for each used car in your inventory. Transparency about a car’s history, including accident records and maintenance, can instil trust and confidence in potential buyers. It reduces uncertainty and encourages them to commit to a purchase.
- Customer Testimonials and Reviews: Share positive customer testimonials and reviews on your website and social media channels. Real-life success stories from satisfied customers can build trust and credibility, making potential buyers more comfortable with their decision to buy from your dealership.
- Trade-In Offers: Promote trade-in offers and valuation services. By allowing customers to trade in their existing vehicles, you can make purchasing a used car more financially feasible. Highlight the convenience and financial benefits of this option.
- Engage in Online Marketing: Invest in digital marketing strategies to reach a wider audience. Leverage social media, search engine optimisation (SEO), and online advertising to attract potential customers. A robust online presence can help you capture the attention of buyers who are actively searching for used cars.
In this evolving financial landscape, staying informed and offering tailored solutions will be the key to success for car finance intermediaries. As the situation develops, adapting to meet customers’ changing needs will be essential for the industry’s growth and prosperity.
Want to Diversify Your Finance Portfolio?
As a premier car finance provider, Marsh Finance goes beyond mere financial solutions. We offer a complimentary consultancy service to enhance your sales, streamline operations, and ensure compliance, all of which are essential in today’s fiercely competitive market.
What truly distinguishes us is our unwavering commitment to innovation. Marsh Finance is one of just two lenders that extend non-prime PCP options, expanding the array of products available to car finance intermediaries like yourself.
Are you ready to collaborate with a company that possesses a deep understanding of the intricacies of the automotive sector and can empower your business to flourish? Discover how Marsh Finance can become your trusted partner in this ever-evolving industry by clicking here.