How COVID-19 Changed The Car Financing Industry

How COVID-19 Changed The Car Financing Industry

Life-shattering, painful and at times incredibly boring, COVID-19 has undeniably changed the world over. Its effects have altered the way we shop, thi

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Life-shattering, painful and at times incredibly boring, COVID-19 has undeniably changed the world over. Its effects have altered the way we shop, think and even communicate. Life as we know it has never looked so different. Out of the many victims and casualties of the pandemic, the economy has been hard hit. 

With nations under full lockdown and the movement of people suspended between countries, we truly are living in unprecedented times. 

Undeniably, personal loans have taken one of the biggest hits, and the car financing industry has had to change in response.  As we start to look beyond the pandemic, we need to consider the larger impacts on the industry. Let’s take a look:

Business survival

Closed signs litter the high street, online platforms are intermittently flashing positive and negative COVID-19 information, and the word “furlough” has become a bit of a taboo. Businesses up and down the country have taken a significant hit; financially and emotionally. The car financing industry is no different. 

In response to the pandemic, lenders have had to shift their way of working. You’re more likely to rely entirely on email, online customer support or speak to an agent working from home. Offices are largely closed up and down the country, and unless you are deemed an “essential” business in the UK, your doors are firmly shut. 

Everything to curb running costs all the way down to ensure sufficient liquidity is all taken into account. 

With less incentive to go out other than your daily exercise and again, “essential” shopping, there are fewer reasons to hop in your car these days. The idea of purchasing one is far from the average Joe’s mind. Dealerships are closed, and everyone’s attention is online. 

Demand for personal loans

Not unlike the rest of the world, the UK’s economy has taken a significant hit. Interest for consumer loans has plummeted, and the demand for personal loans has all but disappeared. People are more concerned about their circumstances than ever before, and you can’t blame them. 

There is hope. Innovative car finance companies like Carvine have decided to buck the trend and adapt to the industry’s circumstances. Loans and credit are still available, but with one fundamental change: they have more stringent criteria attached. When you really think about it, it is the most sensible adjustment lenders at this time could make. 

Many have faced job cuts across the UK or have had to accept the furlough scheme rolled out by the government. With so many unpredictable circumstances running rife through the country, lenders have never dealt with such fluctuating repayments. Never has the car financing industry dealt with so many unique influencing factors. Repay rates are unclear and unreliable, and for a business that thrives off its customers’ spending behaviour, the industry has never seen such a curveball. 

So, what about the dealerships?

Dealerships and car financing go hand in hand. As one part of the whole learns to adapt to unpredictable outcomes, the other has also had to embrace a multi-pronged business strategy to survive. With the tier system rolled out, followed by a full-scale third lockdown, dealers have had to find a balance between digital infrastructure and solid ground. 

While balancing a direct link to the showroom and providing a positive online experience, the dealership has responded well to the crisis. Using online tools such as Zoom to create the seller-buyer relationship is just as important as raising the industry’s profile. Everything from virtual showroom tours, to getting up close and personal with the vehicle you are interested in are all part of the deal. 

Looking to the future

The long-lasting consequences of COVID-19 on the car financing industry is difficult to predict. With regulatory pressure and the lack of consumer interest all at play, the industry is undeniably under threat. 

Realistically, economies have historically survived the uncertainties of war, environmental catastrophes and managed to rebuild itself after the Great Depression. Although it is hard to know which businesses will weather the storm, the forward-thinkers are prepared to push the boat out. Customer satisfaction remains the dealbreaker. But for those still willing to go the extra mile amid the chaos, the commitment to staying afloat is more likely to pay off in the end. 

The need for financial assistance is still critical across the UK. From the hospitality industry to your local, family-run gift shop, businesses are still very much in need. On the upside, as consumers start to reclaim their spending habits post lockdown, the car finance industry can begin to predict their client’s repayments with more certainty. 

As we approach the “final race” before reaching the finishing line, COVID-19 will have a lasting impact on the car finance industry for years to come. The silver lining is that once consumers can return to some of their normal spending habits, the demand for personal loans will rise again. So keep your dream car in mind, the party’s not over yet!