Blog: Finance shortage
Dave Leggett | 13 March 2009
I keep hearing conflicting things about access to finance for prospective car buyers in Britain. Some people in the industry say finance is not the problem and that the real problem is the bad economic situation. And they add that there is plenty of finance. Others say finance is restricted and that it is therefore being rationed so that rejected applications are at an all-time high. I suspect the real position is somewhere in between. Demand is of course lower and in some areas of the market finance is probably available and not taken up. But in other areas of the market finance is in short supply.
And that is a tough break for car companies who have the product and the customer, but the finance isn't there or if it is, it has to be severely rationed among prospective buyers. It's probably similar to the mortgage market where you now need a 30-40% deposit or equity to get a mortgage on a property and 100%+ mortgages are looking like history. Lenders now have a very different take on risk. But while no-one in their right mind wants a return to the overblown subprime era, frozen credit markets are still doing damage to the economy. The government response seems poor, to say the least.
If you are a British citizen and would like to see a German-style scrappage incentive to boost the car market in Britain, there's an online petition that you can sign:
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