Near-prime motor finance providers are continuing to “tread carefully” in terms of pricing and underwriting, according to Startline Motor Finance.
Startline’s chief executive Paul Burgess, said the company had noticed its competitors were less open to lending and had presumed this would change over time, but this did not seem to be happening.
“This is not a uniform trend across all providers but the near-prime sector as a whole has certainly shown a much reduced propensity for business, with several major providers choosing to tread very carefully as they have made their way through the pandemic.”
Burgess continued: “It is something that has surprised us because our own book has remained very solid. We have retained the same approach since before the pandemic right up to today and our business has grown by around 30% since the start of 2020.
“By now, with life returning to some kind of normality, we expected other providers to begin to adopt a less cautious approach but that doesn’t seem to be the case and indeed, there are some signs of a further tightening up.
He added that although there were still valid reasons to be concerned about lending, Startline Motor Finance had already factored these into its future plans.
“There are good reasons to be pleased about the way that the economy has sprung back into growth over recent months. However, significant risk factors remain,” he said.
“For example, while further lockdowns may be unlikely, there is still the possibility of a fourth wave of the pandemic this winter while, more immediately, we are coming to the end of furloughing and this may lead to an increase in unemployment.”
However, Burgess remains optimistic about the year’s final quarter and 2022 as a whole, saying that although he expected the journey to be “a little bumpy”, the used car market was likely to stay “relatively buoyant.”
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