Fewer Car Finance Lenders Means More Will Be Refused Credit

Friday, 19. December 2008

Unless you work in the finance industry you may not fully understand the term ‘credit crunch’. It is simply the running out of money to lend, hence the reason why the Government is having to step in to inject more money into the economy and provide money for the banks to lend – in theory. Of course all they are doing is using the money to bolster their balance sheet making the ‘cash in bank’ look a little healthier. The problem for you and me is the ability to borrow money, this has greatly reduced over the last 12 months. At a time when people are getting into financial difficulties and need to finance a car after going into arrears with a few payments the specialists in this sector, known as sub prime (prime being those that are strong credit), are dropping out of the market. With the potential for high levels of bad debt lenders are now loathe to lend in this sector, bearing in mind the problems that led to much of the collapse which stemmed from the US sub prime mortgage sector. One of the oldest sub-prime lenders, British Credit Trust has scaled back it’s operations by affectively eliminating brokers from the introducer equation. Other smaller companies have gone as well, along with major lenders in the prime sector and small sub prime offshoots leaving a limited choice of lenders. It is therefore important to try to keep your credit as strong as possible to avoid slipping into this sector and if you are about to change your car make sure that you use the most appropriate form of finance. Some of the methods are explained in my book, ‘An Insider Guide To Car Finance’ along with a number of things to beware of when applying for finance. I am completing a new book in which I have identified 31 different ways to finance your car, some are amazing whilst others are a complete rip off. And these methods are core methods, lenders and car manufacturers that provide their own finance have slight variants on these methods that they have badged with a fancy name which means there are actually hundreds of ways of financing a car. The book is set to launch early next year in digital format. In the meantime you can get a copy of my current book and the new book will be sent free. Make sure that you look after your credit and avoid adverse appearing on the credit agency files. If you need help I’m always available for advice. Just call Graham Hill on 01444 235132. Whilst I am writing this I see that General Motors in America has launched a marketing scheme entitled ‘Financing That Fits’. Well I never! By Graham Hill