Abe Smith, CEO & Founder of financial technology firm, Dealflo, says that while the Bank of England’s interest rate hike was small, it will have a big impact on automotive retail.
Abe Smith explains, “The 0.25% interest rate announced by the Bank of England may be modest and still sees interest rates at exceptionally low levels, but it changes the mood-music for lenders and consumers, many of whom will never have seen rates increase.”
“With the Bank of England signaling the potential for further rises, we expect to see lenders become more risk averse in their underwriting and consumers becoming more cautious in their spending plans. This is exactly what the Bank would hope to achieve.”
Dealflo predicts that the rise will lead to an increase in arrears that anecdotally is already emerging gaining momentum. Alongside this, there is the inevitable exposure to accusations of mis-selling.
Smith concludes:“The rate rise carries an inherent risk that people who find themselves over-committed financially may seek to mitigate their situation by pointing to poor sales practices and claims of mis-selling. In a motor market that is itself slowing, dealers and lenders need to look again at their agreement processes and technology, so that both lenders and customers are protected alike.”
Leave A Comment