Car Finance Industry Optimistic about Future Growth

DORSET, ENGLAND, June 07, 2011 (Press-News.org) After a strong start to 2011 the car finance industry is looking forward to continued growth in the UK. March again showed positive signs with GBP707 million of business written. This was a 1% increase compared to March 2010. The figures for the first quarter of 2011 compared to 2010 are still being skewed due to the scrappage scheme running in 2010.

The number of cars sold in Q1 of 2011 was down when compared to 2010. However the value of the vehicles being sold has increased, which indicates the scrappage scheme helped to increase the number of cars sold, but, the value of these sales were lower.

There is strong evidence that liquidity is back in the market as most financial lenders have seen increase in the amount of money lent across a variety markets. Commercial vehicle finance is up 32% in Q1 in 2011 compared to 2010 and this is a common trend across many different markets. It is likely that the car finance market would have followed this trend had it not been for the scrappage scheme inflating sales in 2010.

The car finance industry was buoyed by the government's scrappage scheme throughout 2009 and 2010. This led to distorted sales figures which did not truly represent the industry's state as consumers were making purchases based on subsidies from the government. This scheme was vital for the motor industry which suffered greatly through the recession but had now led to inflated figures of how the industry was actually performing throughout 2010.

Consumer confidence is now increasing again and people are less worried about making large purchases. This is good news for the finance industry with lenders also feeling more confident about lending money for motor finance.

The next few months' statistics will be interesting as the difference between the current figures and the figures post scrappage scheme will show just how well the car finance industry has recovered from the economic downturn. It is likely that the figures being shown will provide good reading for all involved in the industry.

Creditplus, a leading provider of car finance, have seen a large increase in the amount of interest being shown in finance so far in 2011. Consumers are searching for more vehicles and as a result finance applications have increased.

Shaun Armstrong, managing director of Creditplus, states: "We are really pleased with how 2011 has started. Q1 has seen an increase in the number of finance applications we are receiving along with improved approval rates. This means we are able to provide our customers with more finance options and at better rates than we have been able to over the last couple of years."

Non-prime lenders have seen the biggest shift in lending decisions. Although the lending criteria being used by most lenders is still strict, it is becoming easier for consumers who are near prime or sub-prime to find a lender. There has been a particular improvement for consumers who are either non-homeowners or subprime homeowners with some lenders increasing acceptance rates by nearly 30%.

Shaun Armstrong continued: "Over the past couple of years subprime or near prime consumers have struggled to obtain credit even when it has been secured against an asset. This was all caused by the recession when all lenders had to make their lending criteria stricter. The good news is, now that the economy is recovering, more and more lenders are starting to provide finance to all types of consumers, not just the prime candidates. This is great news as the number of applications we receive each month shows that consumers feel confident enough to borrow money again."

The next few months will show just how far the recovery has taken the car finance market when comparing it to 2010 and after the government scrappage scheme ended.

Creditplus is a leading UK provider of car loans and related services. For further information please visit http://www.creditplus.co.uk/.