The global Coronavirus pandemic has upended every business market, and the car sales industry is no exception.
One area of the automobile market that is suffering heavily right now is the car financing sector, which provides loans to help buyers to spread the cost of their new vehicle.
With Universal Credit claims at an all-time high and many individuals on reduced wages or no longer working, many consumers who took out car financing before the pandemic will now be struggling to afford their repayments.
Read on to find out more about how the pandemic has changed the car financing market and how it will have to adapt in order to survive.
What Alternatives Do Consumers Have?
In the future, consumers will have their pick of a variety of alternative ways to buy their new car, which means that they might consider searching for a method that doesn’t tie them in for such a long time.
One great alternative to taking out a loan for a new car is to lease it. Drivers can still enjoy the use of a brand-new, top of the range car, but without the responsibility of owning it. This can be done through companies such as Vantage Leasing who offer a wide range of car leasing deals, so drivers will be able to find an alternative solution to financing when seeking to replace their old vehicle.
How Can Car Financing Companies Adapt?
For the car financing market, there are still great ways to meet the needs of clients. Any existing car financing clients can take a payment holiday, but even once this is over they might still struggle to afford their repayments.
As such, companies in the car finance market need to be prepared to take on some losses or repossess vehicles over the coming months and even years. Consider offering discounts to incentivise your debtors to pay as much of their loan off as possible.
Will Car Financing Continue Once The Lockdown Is Over?
While there is no reason why car financing can’t continue in the future, it is clear that consumers will be more cautious as a result of the pandemic. Many consumers will have less money and bad credit, and those that do have the money to finance a new car will be concerned about a future crisis that could leave them saddled with substantial debt that they can’t pay off.
As a result of these changes, car financing providers will need to adapt their marketing strategies in order to reassure potential buyers and keep providing the loans that their businesses depend on. Thankfully, new buyers may enter the market over the coming weeks and months owing to the Government’s advice not to use public transport unless absolutely necessary, meaning that drivers who didn’t previously own a car will now be looking for one and might be willing and able to take out a loan to pay for it.
Conclusion: The Market Is Definitely Changing
Overall, it is clear that the car financing market is evolving as a result of the Coronavirus pandemic. While these developments might not completely kill off car financing, it is clear that the market will have to adapt in the future to ensure it remains profitable.