Usually I reserve this
space for a fairly specific discussion of an issue facing the motor
finance industry – be it cost of funds, retail penetration or
whatever else has made headlines in a given month.
This time round, I am spoilt for
choice.
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I have seen a report on consumer
attitudes towards dealer finance, another on online marketing in
the industry, and a lot of interesting numbers found while
researching the difference between the captive finance markets of
Europe (not so easy in August when everyone on the continent very
sensibly takes a holiday).
When we weren’t busy not getting
through to people in France and Germany, we were listening to the
voicemail messages of F&I directors engaged in the bustling
activity of the
1 September plate change.
And on top of this, we still had time
to host two round table discussions focusing on collections
(see opposite) and finance reps in dealerships (see
p17).
Suffice to say, I have come across an
awful lot of strategic and proactive thinking from the industry
this month, to a level that seems to have drowned out the generic
media backdrop of trepidation over the economy.
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By GlobalDataBut if there’s one small but
significant thing I wanted to single out for personal comment, it
was a quote relayed to me in an anecdote about a business leader
who recently departed the UK motor finance business, and which got
me thinking about the credit industry as a whole.
What the
person in question had said was “it’s our money we’re lending”:
that every lender has the right to refuse credit based on their own
criteria, and that no matter the credit rating or deposit an
applicant has to offer, lenders have no obligation to lend if they
don’t want to.
Of course, the question is often
academic – you won’t see many props with great credit scores
declined on the basis of the lender not liking an applicant’s hat,
for example. But it is strange to remember that, despite the
massive emphasis in recent regulation on the social role of
lending, car finance is not a public service.
Indeed, it is strange that when
lenders adapt themselves to make finance available to as many
people as possible, they are treated with media suspicion for doing
so.
Last month I sung the praises of
subprime as an investment prospect in this column, and now I will
sing its praises as a socially useful industry.
Yes, the newspaper reports (and I am
looking at one right now from one of the Sunday editions) make a
horror show of the fact that consumers can end up paying 200% APR
on deals – but even they admit that this is hardly the norm.
And anyway, with the new stringency of
rules regarding explanations of deal terms to consumers, anyone who
signs up for a high-interest deal has done so because they very
much want a vehicle and have found it to be the only way of
acquiring one.
After all, if lenders have no
obligation to lend the money they have, it’s worth remembering the
opposite – that consumers have no obligation to borrow it!
Fred Crawley
fred.crawley@vrlfinancialnews.com
