The UK's car finance industry, like so many financial industries, has had a rough couple of years. The same can almost certainly be said of most businesses, and most households too if it comes to that.
But the result of this poor financial period has been threefold, and it is these three circumstances which have resulted in one of the gravest assumptions in the market, and one of the best opportunities for customers wishing to pursue the idea of obtaining cars on finance.
The first circumstance was the initial impact of the recession, with so many people losing jobs, facing cutbacks, pay cuts, reduced hours and increased interest rates on mortgages and loans.
As a result of this, many people who had previously obtained finance fairly easily, especially car finance, were facing problems. Clearly given a straight choice between feeding their families, paying for the roof over their heads or keeping up repayments on the car, it was the car loan which took the brunt of the financial downturn.
This meant that quite rapidly the car finance industry faced a problem - defaults, missed payments, broken agreements and one rather large hole in their account books.
This problem was compounded by the second circumstance, which was that with so many people having to tighten their belts, pull in the reigns and cut back wherever possible, only a fraction of the number of people normally anticipated were applying for cars on finance or for any form of car finance.
The financial hole was not being filled in anywhere nearly quickly enough to keep the underwriters happy. It was at this point that the third circumstance came into play - as a result of the first two issues, the reaction was to both increase interest rates and fees, and decrease the chance of anyone with less than perfect credit obtaining any form of finance or credit.
With the minimum necessary credit ratings drastically increased, many of those people from the now dwindling market who applied for car finance were no longer able to get the credit they had hoped for.
Certainly the idea of cheap car finance went out of the window, and so the car finance market suffered. Certainly there were those few who seemed to escape the recession, but for the average household, even considering the idea of taking out car finance was out of the question, even if they could have passed the credit test.
With the past two years proving so difficult and so challenging, a huge number of people have been forced to miss a few payments here and there, with several late payments, and maybe even one or two accounts going further, such as defaults or even County Court Judgements.
But although it might reasonably be expected that someone with a credit history which includes defaults and CCJs will find it difficult to obtain credit, even those who have just had one or two late or missed payments have been finding it hard to identify a car finance or lending institution willing to offer them credit.
But with all this doom and gloom, it's worth remembering that at the start of this article we mentioned that there is a grave assumption, and a good opportunity - so what's the good news then?
The fact is that the recession is over, and many more households are now finding that life is beginning to return to normal, with payments up to date, or arrangements in place, and an income which more than covers the commitments.
This means that the car finance industry is keen to find such people, which could mean you. But what about the problems with credit histories? Whilst it is true that many financial institutions will be especially cautious and require pristine credit histories, the grave assumption is that the whole of the car finance industry is similarly obsessed with history.
The truth is that there are many car finance firms who give only scant consideration where a credit history is concerned, and who are far more interested in a customer's current circumstances. After all, the past two years are hardly typical - it's the here and now which is more relevant and a better indication of whether or not a customer is able to keep up repayments.
The opportunity, then, is to take advantage of this period in between the recession, and the financial world fully recovering. By jumping on the bandwagon now, it is more possible than ever for customers to obtain car finance, regardless of the problems listed on your credit history.
Author Resource:
Car Finance | http://www.carloan4u.co.uk/ | Cars On Finance
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