A HARD Brexit in October will make flexible motor finance much more important.
That’s according to Startline Motor Finance, whose chief executive, Paul Burgess, pictured, said today: ‘It is not a political comment to say that even the best hard-Brexit outcome would be bad for the economy and the worst could be very damaging. Almost no economic experts see a positive effect in the short to medium term.
‘This is likely to influence all aspects of the used car market, and motor finance will not be unaffected. Given historical precedents, underwriting rules are likely to be tightened just when used car retailers really need some additional flexibility.’
He added that matters could become even more acute if a hard Brexit caused noticeably higher unemployment or an increase in loan defaults.
‘All of these will impact on used car buyer credit scores, which is something that we saw after the financial crisis. There will undoubtedly be a demand for motor finance from people who have encountered these problems, and more flexible motor finance is the only solution without turning to the high rates and tough conditions of sub-prime lenders.
‘The motor finance sector has been lagging a little way behind the manner in which work and home ownership patterns are changing. Our approach is to spend more time looking at these people to build up a comprehensive and realistic picture of whether they are a good risk.
‘In a post-hard Brexit scenario, we will be able to bring this understanding to bear in a manner we believe will potentially be very beneficial to used car retailers and their customers. While we certainly won’t be able to help everyone, there will be a worthwhile percentage of customers rejected by prime lenders that will fall within our range.’