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MORE products are needed to accelerate the motor finance sector towards providing a spectrum of options that meet the needs of customers at all points of the market.

Startline Motor Finance believes more needs to be done to meet the requirements of diverse groups of used car buyers.

Chief Executive Paul Burgess said: “Really, what we have done at Startline is add near prime options to a motor finance sector that consisted almost entirely of prime and non-prime lending.

“It’s an achievement and serves an important need for dealers and car buyers but, essentially, we’ve only moved the choice from two levels of finance to three.

“What is clear to us is that there is a much wider spectrum of finance needs in the market. Quite how many is difficult to say but it would not be a stretch to suggest that the market should perhaps be operating over at least five identifiable levels that are easily understandable to dealers and car buyers.

“It’s not just a matter of providing a kind of single sliding scale to cover different levels of risk – that’s an approach driven by finance provider thinking rather than customer needs. Instead, it means developing an understanding of different groups of customers with different requirements and delivering products that meet those desires.

“Not only would such an approach be better for everyone operating in the used car sector but it would very much fit into the way that the FCA views the market, giving them a wide choice of effective products to find the solution that fits their needs.”

Burgess added that there appeared to be growing awareness in the market of the role of a wider range of finance products, with recent research by Startline indicating that two out of three dealers (66.1%) believed that near prime finance will become more important to their businesses if there is a recession in 2020, for example.

“We now have dealers operating in mainstream sections of the used car market where perhaps a fifth of their business is being written as near-prime.

“There is a definite need for this kind of product and it is quite clear, from our viewpoint, that there are other identifiable points in the spectrum, such as our Finishline product, which you might describe as near-near-prime and sits slightly below our main proposition.

“But what the market really needs is more innovative products. As you would expect, we have plans ourselves, but there are other customer demographics and characteristics where opportunities lie and it is really up to motor finance providers – both new and existing – to meet them.

“We believe that this is especially important at a point in time such as now when economic conditions might be quite difficult over a relatively a long period of time, depending on how leaving the EU and other factors play out.

“Acting to enable car buyers to make the purchases they want to make will become an ever more important factor in maximising sales – and the right finance products are needed to do that.”

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