A personal contract purchase product launched by Startline Motor Finance to bridge the gap between prime and sub-prime finance is seeing a 50% penetration at some UK franchise dealerships.
The “flexible prime” product sits alongside traditional lending offers from prime lenders and is suggested as an alternative source of funding when applications are initially declined.
The product offers interest rates and general terms that are similar to prime lenders, rather than resembling a sub-prime product.
Startline Motor Finance CEO Paul Burgess said: “In many cases, we are helping dealers to sell cars, and customers to buy them, in a way that would be otherwise unavailable.
“They recognise that it is an innovation that could potentially open up PCP to a wider market that has previously been ignored by the motor finance sector.”
The PCP is based on assessing a broader range of factors than just work patterns or other socio-economic factors.
Burgess added: “We live in a changing world and just because someone rents their home or works on a series of temporary contracts should not exclude them from a fair approach to motor finance. Around 20% of used car buyers fall into this category.
“We take a closer look at the circumstances of the person making the finance application, often entering into a dialogue with them and with the dealer. The thinking is that if we can gain an understanding of that person’s overall financial position, then we can work to arrive at a solution that meets their needs. It’s a more holistic process.
“Too many customers who do not meet prime criteria are passed straight to sub-prime lenders when they remain good credit risks, we believe.”
