Traditional high street banks are trying to improve their balance sheets by not lending on risky personal loans with no security. Most car finance deals are secured on the car, with the asset belonging to the finance company until the final payment is made.
The major benefit to the finance provider is that they are risking less money on car hire purchase or PCP ( personal contract plans) deals, as they have the car as security. This means they are more likely to lend, and at reasonable terms.
Car manufacturers often own a stake in the finance company that they are tied to, and have a vested interest in ensuring high acceptance rates to make sure their cars are sold. Sub-prime customers will have difficulty in financing still, but the average man or woman in the street should find a welcoming ‘yes’ to their finance application.
High street rates used to be much lower than dealer finance rates, but the gap is lower on non-existent now. And banks operate rate for risk policies, which means the lower your credit score, the more you pay!
So before you rush off to your local bank for a car loan, try your local dealer or search online, you might find you get an easier ride to you next finance deal.
View the best finance deals now