Less Money To Lend For car Finance

Tuesday, 8. June 2010

The importance of using a good car finance broker has been once again highlighted by press reports confirming a lack of money available to lend, as the effects of the credit crunch continue. In a recent article, John Lewis, chief executive of the British Vehicle Rental and Leasing Association, pointed out that funding is still in limited supply and ‘the days of easy credit are long gone.’ He went on to confirm what I have been saying for many months in these newsletter articles and blog postings about the lack of money to lend. He also explained that most of the banks made a mass exodus from the fleet finance and leasing market with nearly half the funders disappearing in just 2 years. This has made it more difficult to arrange credit with the credit bar raised much higher than ever before. This has meant that it is important to use a broker with several funding sources who can not only find you a decent rate but put you to a funder who is most likely to approve you on finance. To have blemishes on your credit report and still be able to achieve the very cheapest lease or loan rates is ridiculous. Also the importance of preparing for credit has never been higher. Just a couple of points lost on your credit score can lose the offer of finance or increase the rate offered substantially. The situation will only worsen with the run down or withdrawal of the Bank of England’s quantitative easing programme. Regulators are already forcing banks to continue to improve their balance sheets meaning that their reserves increase and there is less money made available to lend. And the situation will worsen before it improves. So my advice is if you are considering changing your car but putting it off for a while, even though you can afford it, do it now. You might still have to wait several months for your car but you will have the finance approved and in place. By Graham Hill