Over half of brokers who took part in Paragon’s annual broker survey said they were concerned online finance solutions would lead to a slight reduction in business demand in the long term.

A further 10% said it would lead to a significant reduction in demand.

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This compared to 38% who anticipated it having no impact.

In the short term, brokers were more positive. While 19% still said it was having a negative impact on demand, this compared to 43% who said it wasn’t impacting them, 14% who weren’t sure, and 24% who said it was having a positive impact.

Julian Rance, head of Paragon Car Finance, said: “2016 was a big year for new car sales and an increasing amount of this business is done online, often directly via a manufacturer’s own finance products.

“Despite this trend however, it is likely that online purchases will remain largely restricted to the new car market. Purchasing a used car online involves much more difficulty and risk than does purchasing a new car and while customers might source used car finance online, it is likely they will still want to check a second-hand vehicle in person before purchase. This puts dealers, and by extension brokers, firmly in front of the customer at the point of sale.

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“Furthermore, we should expect a 5-10% decrease in new car sales throughout the rest of 2017, which in turn could lead to an increasing amount of business going to the used car market. As such some of the concerns brokers have about online competition will likely be alleviated over the course of the year.”