Updated: June 2018
There has been a lot of speculation and headline-grabbing in recent months with regards to the topic of car finance and ‘subprime lending’ driving an eventual economic crash. While the auto sector is rather more prone to shocks and scandals than many other industries, it is understandable why the term ‘subprime lending’ may trigger alarm bells, since it is often linked to the financial crisis a decade ago, which forced several global institutions to crumble. The current auto industry situation According to reports by the Finance and Leasing Association
A German court has ruled cities can impose driving bans onthe oldest and most polluting diesel cars,reported The Independent newspaper on27thFebruaryin a landmark ruling hailedby Greenpeace as“a victory for clean air”.
On days when harmful emissions are particularly high, the rulingcould lead to around 15 million motorists inGermanyhaving to switch to cleaner cars, or usealternative forms of transport.
Germany has persistently flouted EU rules on levels of air pollution,with Barbara Hendricks, the country’s environment minister,called to Brussels in January this yearto answer questions.
Emissions of nitrogen dioxide (NO2), which is linked to lung problems, are several times higherin diesel than in petrol vehicles. And with public awareness over air quality and the Volkswagen emissions scandalthree years ago, it is perhaps no surprise that environmental campaigners have alsosued dozens of German cities, citing they have a duty to cut excessiveair pollutionto protect people’s health.
The cities of Dusseldorf and Stuttgart had earlier ruled that aban on diesel cars would be effective with judges saying the two cities can include diesel bans in their clean air plans, but must make surethat any measures are proportionate to the goal of reducing emissions to the legal limit.
German Chancellor Angela Merkel said thatthe decision only concerned “individual cities”adding that: “it’s really not about the entire country and all car owners.”
A spokesman from Greenpeace Germany said theruling wasa “victory for clean air, and shows what’s possible whenpublic healthis the priority”.
He added: “AcrossEurope, decisions like these are making it clear that diesel cars are on the way out.
“It makes no sense to invest in a new diesel now, because it’s only a matter of time before even the newest diesels are either banned or priced out of cities.
“Instead, dirty diesel cars will be replaced by cleaner, greener electric cars, improved cycling infrastructure and sustainable transport that’s good for health and theenvironment.”
In the UK, where major cities also regularly breach EU limits, all sales of new petrol and diesel cars will end by 2040.
In April 2019, London’s new ultra-low emissions zone (ULEZ) will also come into force,combining with the congestion charge and existing low emissions zone to impose an additionalcharge on drivers of the most polluting vehicles.
The BMW is probably one of the most iconic brands in the world. From the company’s humble beginnings in Germany during the early 20th century to its global popularity in the last 50 years or so. It is, therefore, of no surprise that BMW is now one the best-selling cars in the UK.
If you are looking to finance a new or used BMW then you have come to the right place! At CarFinance Plus we can help you to arrange an affordable deal, even if you have a less than perfect credit score. But first, let’s review some of the vehicles that are currently on the market.
The BMW 1 series is known for its sporty character and elegance. The exterior design is complimented with a solid body and beautiful interiors. It’s available as a three or five door car and it boats perfect handling and steering precision. In part, this comes from the efficient dynamics technology.
The new BMW 2 Series Coupé is the ultimate sporting coupé thanks to its superb driving dynamics and responsive rear-wheel drive allows the car to accelerate from 0 to 60mph in 4.8 seconds.
The convertible has a great design with sleek contours and the M240i has a TwinPower Turbo inline petrol engine. The Active Tourer is perfect day-to-day cruising and the Gran Tourer offers plenty of space and flexibility.
This series focusses on the driving experience. It offers next generation innovation, including smart phone remote locking, navigational assistance and TwinPowr turbo engines for greater on-road performance and suspension.
Available as a saloon, touring car and an SUV. All options come with BMW emergency call, iDrive Touch Controller and LED headlights.
The BMW 5 series is the epitome of BMW in regards to design excellence and innovation. It certainly stands out in a class of its own as it offers exceptional driving dynamics and a revived elegance we have come to recognise. The BMW 5 Series ensures every journey you take is an unforgettable experience.
There is a huge range of both economical and powerful TwinPower Turbo engines, in either diesel or petrol.
This BMW series is the epitome of a luxury saloon car. It is leaner, lighter and stronger than ever before thanks to the revolutionary carbon core body work. It offers plenty of luxury but at the same time has the agility of a sports car and it comes with an array of innovations that will take your breath away.
The BMW i8 is the most advanced sports car on the market. It is a truly revolutionary vehicles as it’s the first sports car with the fuel consumption and emission of a compact car.
The BMW i8 features materials that are ground-breaking and has a striking design that offers perfect aerodynamics. The form and shape is unmistakably BMW and it features technology for safety, convenience and comfort. With the I Wallbox the BMW i8 can be charged from home simply and reliably in under two hours.
The BMW X1 is striking and athletic looking. This SUV is an everyday vehicle. It offers vast amounts of interior space and it is ideal for any growing family. With a confident stance it will turn heads wherever you go. The BMW X1 also comes with superb technological features, including Business Navigation, Real Time Traffic information and ConnectedDrive.
The X3 series was the original Sports Activity Vehicle class from BMW. The latest models retain BMW’s unmistakable character. Thanks to the wide bumper with powerful air inlets and the double kidney grill, the car commands presence on the road. Whether used for everyday driving or something more challenging, there is something for everyone thanks to the TwinPower Turbo diesel engines. With the efficient dynamics of BMW the X3 is not only sporty, it is also economical.
The interior of the X3 series offers all-round comfort, ingenious functionality, modernity and quality.
Thanks to the elevated seating position, all passengers enjoy an outstanding view. Whichever model you choose, it will come with BMW Business Navigation, BMW ConnectedDrive Services and three years’ subscription to BMW Online and Real Time Traffic Information as standard.
Behind the wheel of the BMW X5 you can lead the way without any compromise.
The design of the X5 offers a strong character that will inevitably grab people’s attention, while the elevated seating position provides comfort and optimum views. Several new design features have been added but it remains unmistakable as BMW heritage.
The interior of the car is luxurious and it is packed with the latest technology, including LED headlights that are adaptive.
The BMW X6 is offered with a range of engine with choices including the TwinPower Turbo V8 petrol, the Turbo inline six-cylinder diesel and the Turbo six-cylinder diesel engines. It has dynamics that are irresistible, along with low emissions and fuel consumption and it is comes with plenty of equipment as standard.
So now that we have reviewed the broad range of BMW’s the only thing you have to think about is which one to choose and arrange your car finance. Whether you’re considering a coupé, convertible, saloon, a touring car or an SUV car we can help you find the right deal to meet your budget. Apply today and travel on the road in style!
Is Britain indebted to the used car market? But is that debt steadily undermining the used car market itself and posing a threat to the nation’s overall financial security?
As was argued in the Financial Times’ edition of the 25th of June 2017, there are certainly a number of economists – and even some within the industry – who think so.
Against the background of record numbers of new car sales and a booming trade in used cars, the economic argument for concern about such an apparently healthy state of affairs is relatively complicated.
Fuelling the demand for new cars is the widespread availability of credit, it is said. According to the Finance and Leasing Association (FLA), 86.5% of new cars are bought using some form of car finance – the most popular solution being a Personal Contract Purchase (PCP), which gives the customer the option of purchasing the vehicle at the end of the contract (at its predetermined “residual value”) or simply handing it back and embarking on a further PCP for a further new car.
As a result, 2016 saw a record 2.69 million new car registrations, according to statistics compiled by the Society of Motor Manufacturers and Traders (SMMT). These sales are estimated to have been facilitated through the advance of a total of £18.6 billion in various forms of car finance.
The used car market appears to be even more buoyant, with more than 8 million transactions being recorded in the same year, purchased through a total of £14 billion of credit, says the Financial Times (FT).
Some economists argue that trading in both new and used cars which is reliant upon such massive levels of debt is simply unsustainable – and, therefore, a threat to the economy as a whole.
Already, there are signs of increasing rates of depreciation in used cars. The FT cites figures suggesting that a second-hand car under two and a half years old is currently worth less than 58% of its original value, compared to just over 61% three years ago.
To a certain extent, this reduction in value may reflect changing attitudes towards car use and ownership. Rather than outright purchase, the popularity of current finance deals makes monthly payments for continuous use of a more or less new car that may be changed every three years as each PCP agreement draws to its conclusion – use of a car has become almost akin to a mobile phone contract.
The impact on the market for new cars may be deceptive. On the one hand, such strong demand for a new car every year boosts manufacturers’ ability to sell higher-value vehicles. But that trade is also dependent on those new cars maintaining a relatively high residual value – a risk that is subject to changes in the market and one which falling used car prices seem to be make worse.
Somewhat paradoxically, therefore, the falling prices of used cars is likely to increase the cost of new cars, since manufacturers become unable to offer such attractive finance deals. Counter-intuitively, therefore, this raises the prospect of customers having to pay more in monthly repayments on their car finance deals.
Vaunted as a “green revolution”, fanfare has surrounded the government’s unveiling of a clean air strategy designed to tackle the traffic pollution that is estimated to contribute to 25,000 premature deaths in the UK every year, or some 5% of all deaths, according to the campaign group Healthy Air.
On the face of it, the strategy certainly involves some radical proposals. Probably the most eye-catching of these is the commitment to ban the sales of all petrol and diesel-powered cars and vans in the UK by the year 2040. In plans announced by the government towards the end of July 2017, this is expected to ensure that the vast majority of car and vans on the roads by 2050 have zero-rated emissions.
In addition to this headline-grabbing target, the main push is intended to come from local councils, according to a government briefing paper also published in July.
The paper described the £2.7 billion that is already being made available to implement its clean air strategy, including:
£1 billion of funding to encourage the use of ultra-low emission vehicles (ULEVs);
£1.2 billion to promote cycling and walking as alternative preferred means of transport in cities;
a £290 million investment in the National Productivity Investment Fund – to encourage cleaner road transport by buses and taxis;
A total of £116 million in the Green Bus Fund and the Clean Bus Technology Fund; and
£100 million in traffic congestion improvements to the national road network.
The real impetus for change is expected at the local level, through the implementation by local councils of so-called clean air zones (with restricted entry or even charges for diesel vehicles), according to the government paper. To help achieve this, a £255 million Implementation Fund is to be created, a Clean Air Fund will also be set up, and £100 million will be made available to encourage the retrofitting and replacement of new low emission buses.
According to many environmental pressure groups, for all the fanfare, the strategy simply does not go far enough – and many of their views are encapsulated in a report by the BBC on the 26th of July 2017.
Included in the criticism from a number of different groups are the complaints that:
Even some local councils – the very authorities expected to carry out the national clean air strategy – have described the measures as “woefully inadequate” according to a report in the Financial Times on the 26th of July, citing members of Sheffield City Council.
Local authorities seem to have been handed an almost impossible task, which boils down to an instruction to cut air pollution in their areas in the fastest possible time, yet without unfairly penalising “ordinary working families”.
Even such iconic marques as Daimler and BMW seem to be fighting a losing battle against a newcomer in the production of luxury cars.
The upstart in this particular case is the American car maker Tesla, owned and championed by the colourful Elon Musk.
What’s catapulting Musk’s vision into the lead and dragging the German manufacturers backwards is the technology and motor engineering of their respective vehicles – Tesla’s electric cars represent a vision of the future and reliance on the latest technology which is fast garnering the support of governments and customers alike.
BMW and Daimler, by contrast, seem to be rooted in the past, through their reliance not only on petrol-engined cars, but the most polluting variant of these, the diesel-engined vehicle.
In a last-ditch stand – and one almost certain to end in failure – German manufacturers Daimler, BMW and Volkswagen convened what they billed as a “diesel summit” at the beginning of August 2017, reported the Financial Times newspaper on the 2nd of August.
With the new, technologically advanced Tesla 3 reaching the market at a highly competitive price of around US$35,000, the American manufacturer has also thrown down the gauntlet to the costly offerings from Daimler and BMW.
The stand being taken by the German manufacturers – once world leaders at the cutting edge of luxury motor engineering – are now for all the world striking a Canute-like pose at the water’s edge.
However powerful they might once have been in leading the way that other manufacturers followed, the tide has most definitely turned against diesel – and its fate seems inevitably and irrevocably sealed.
So-called “Clean Air Zones” have already been introduced in a number of British cities and the Department for the Environment, Food and Rural Affairs (DEFRA) is actively encouraging their adoption in many other heavily-congested areas, said Auto Express magazine in an article on the 26th of July 2017.
Unless the designation of Clean Air Zones encourages greater uptake of less polluting vehicles and a greater switch to the use of public transport, says the article, diesel cars may need to be restricted to access to such zones by imposing charges at the most heavily-congested times of day.
Whilst the death knoll is sounding for diesel, on the other hand, the future of electrically-powered vehicles has never been brighter.
On the 26th of July 2017, for example, the Guardian newspaper reported the government’s decision to ban the sale of petrol and diesel cars and vans by the year 20140 – in favour of those powered entirely by electric or zero-emissions rated vehicles.
This ushers in a whole new set of problems with respect to the infrastructure needed to support the exclusive use of electric vehicles – namely, a vastly expanded network of charging points and the capacity of the national grid to meet the increased demand for energy.
Once again, though, technology may come to the rescue as there is even research to suggest that the power stored in cars’ electric batteries might be up-loaded to the national grid to help smooth out variations in supply from wind farms and other renewable energy sources.
After five years of record growth, car sales in the UK seem to be flattening out, according to a report in the Guardian newspaper on the 5th of July 2017, quoting recent statistics released by the Society of Motor Manufacturers and Traders (SMMT) – during the second quarter of the year, new car sales actually fell by around 10%.
So far, however, these figures have not quelled speculation in some parts of the press and, indeed, the Financial Conduct Authority (FCA) itself, that the availability of car financing solutions is somehow overheating the market for motor vehicles.
In its report for 2016, for example, the Finance and Leasing Association (FLA) remarked on the concerns expressed by the FCA about measures used by lenders to test the affordability of finance that is made available.
Although there may be periodic fluctuations in the total of new car sales, the market continues to be buoyed by the second-hand market too. And the central role played by car finance in all these transactions is undeniable.
In its annual review, the FLA confirmed that some 80% of all new car sales are made via one of the many different types of car finance.
Indeed, the demand for that finance is so strong that the FT Adviser carried a story on the 14th of July 2017 that older purchasers are even turning to equity release on the homes they own in order to meet car loan repayments.
If the demand is so strong, making the car finance more difficult to obtain seems to flow against the inevitable tide of the market.
The FLA reiterates its conviction that the diversity of the car finance market reflects the wide differences in customers’ – a needs and circumstances. It reflects a diversity of financing options which certainly leaves the prospect of equity release on the home you own as a very distant choice of last resort – whatever FT Adviser may say.
Those options, of course, include:
The British motor car industry naturally relies on healthy sales of new and used cars. The demand for finance to facilitate those purchases is clearly very much alive and the motor finance industry continues to rise to meet the many and diverse challenges of supply.
We know cars by their brand name – it’s what makes many of them so iconic.
Despite a long and rich history of many of the names in motoring history, though, the number of manufacturers has dwindled, so that each maker lays claim to a number of different familiar badges.
Let’s see what groupings there are, starting with those manufactured in the UK:
One of the iconic British marques, the company was bought by Ford in 1994 but this changed in March 2017 when Aston Martin regained its status as an independent British company. Click here for more information.
The same cannot be said for another of Britain’s most well-loved makes, the Mini, which started out in 1959, marketed under Austin and Morris badges and was owned first by the British Motor Corporation (BMC) and subsequently the Rover Group, before being acquired by German manufacturers BMW in 1994.
The Bentley marque was bought by another British company Rolls Royce in the 1930s until both companies were acquired by German car makers VW and BMW in 1998 – VW got the Bentley brand and BMW Rolls Royce.
With its Ghost and Wraith models still built at Goodwood in Sussex, the British legend that is Rolls Royce is now owned by BMW.
Another British icon, Land Rover was also bought by Ford – part of the American Premier Automotive Group (PAG) – but the marque was then bought by the huge Tata Group of India, Tata Motors.
The same fate befell the once British Jaguar – first bought by PAG but then also sold to Tata.
Perhaps one of the most surprising stories of a classic British sports car manufacturer, Lotus, was its purchase first by the Malaysian Proton group and then, most recently in May 2017 by Geely of China – which also now owns the Swedish Volvo Car Group.
Vauxhall is one of Britain’s oldest car manufacturers and its Astra and Vivaro van continue to be made here, but under the long-time ownership of the American General Motors group.
There is a strong presence of Japanese car makers, including Honda, in the UK, where both the Civic and CR-V are made in Swindon.
Another Japanese company – in which French manufacturers Renault also have a major stake – is Nissan, which makes its Leaf, Note, Juke, Infiniti Q30 and Qashqai models at its Sunderland plant.
The Toyota Motor Corporation remains a firmly Japanese company, but its Avensis, Auris, and Auris hybrid are also made in Derbyshire.
Other marques of global significance include:
The major manufacturer BMW (Bayerische Motoren Werke) still has its headquarters in Bavaria in Germany – and as already mentioned, also owns Mini and Rolls Royce.
It is sometimes forgotten that the German manufacturer’s original name was Daimler Benz, so, in addition to the Daimler marque, it also owns Mercedes-Benz, Mercedes-AMG, and Smart.
Fabbrica Italiana Automobili Torino (Fiat) is the major Italian company which also controls the American Chrysler Group (makers of icons such as Jeep, Dodge, and Ram, as well historic Italian marques such as Lancia, Maserati, Alfa Romeo, and Abarth).
The founding father of all motor cars, some might say, the American company once owned Aston Martin, Land Rover, Jaguar, Mazda, Mercury and Volvo – but today it’s only marques are Ford and the Lincoln.
The American General Motors company manufacturers Chevrolet, Cadillac, GMC, and Holden brands.
Hyundai is a South Korean manufacturer, which also owns a stake in Kia.
Founded in the 1920s, this Japanese company started making cars in the 1930s and once had a third of its shares owned by Ford (but now sold).
A Japanese company founded in 1970, Mitsubishi is now owned by the Nissan-Renault group.
French motor giant Renault also controls Nissan, Romanian car manufacturer Dacia, Russia’s AvtoVAZ and Mitsubishi.
A terminally ailing and fast-disappearing marque is the Swedish marque Saab.
Subaru is a Japanese company owned in part by Toyota and is a subsidiary of Fuji Heavy Industries (FHI).
Tata car makers are part of the giant Indian group, Tata Industries, and also owns iconic British marques, Land Rover and Jaguar.
Tesla is very much the new kid on the block, producing its electric vehicles in California, USA.
One of the largest car manufacturers in the world, the brand also owns Lexus, Daihatsu, and Hino Motors and its plants in the United States have been producing cars for that market since the 1980s.
The Volkswagen Group is the world’s biggest car manufacturer – in addition to all VW models, it also owns Audi, Porsche, Ducati, Seat, Bentley, Lamborghini, Bugatti, and Skoda.
Volvo is now owned by the Geely, part of the Chinese Zhejiang Geely Holding Group
If you’re thinking of purchasing a car (or cars) for your business, then you’re likely to be in the fortunate position of being slightly spoilt for choice in terms of funding possibilities!
Let’s look at some of the issues and options.
To begin with, it’s important to be clear what your own intentions are.
Although many of us use terms such as “purchasing” and “finance” to cover all situations, more correctly, we should perhaps be saying “using” and “paying” in general terms.
This isn’t just playing with words, it’s actually important because it cuts to the chase as to how you go about getting a business vehicle, pay for it and importantly, account for it too.
For example, do you want to own (eventually) the vehicle concerned or do you simply want a car to drive?
That matters because:
Of course, there are hybrid solutions as well, such as leasing with the option to purchase at the end of the term.
The bottom line is that it’s important to be clear what you’re looking for – eventual ownership of the vehicle or just something to drive? That might play a very big part in you choosing which funding options you progress.
If you really don’t want to eventually own the vehicle or are undecided, these business car finance options may serve a purpose.
There are many variations to choose from but here we’ll consider CH or Contract Hire.
It typically works simply:
You may be able to eliminate the deposit but that will increase your monthly payments.
On the downside, after paying out substantial sums of money over time and taking the P&L hit, you end up without an asset and nothing to show for your expenditure.
Hire Purchase (HP) is a very familiar, simple and eternally popular method of financing a car purchase:
A variation on this is what’s called “Contract Purchase”.
It’s sort of a hybrid between leasing and purchasing:
For many businesses, the idea of spending large sums on a vehicle over time, only to have nothing tangible at the end of it, might seem difficult to take on-board. They might see that as wasted spend and so car finance may be the solution.
On the other hand, lease/rent options do have the attractions of avoiding long-term commitments, as some may allow you to return the vehicle at any time.
In the final analysis, companies may see these pros and cons differently, depending upon their own individual financial position. Your accountant might be able to offer further specific advice here.
The question in the title is easy to ask but far more difficult to answer.
In one sense, of course, the answer IS easy – it’s “nobody knows”! However, when looking at the detail, predictions start to become cloudy.
At the time of writing, the car finance industry hasn’t featured highly (if at all) in the formal UK/EU Brexit negotiations and their associated media frenzy of speculation.
As of today, few details of anything have been released. What little we do know seems to suggest that the discussions are still at the macro principles level. As such, it seems unlikely we’ll hear anything concrete soon about specific industries.
We may need to be patient and wait.
Some time ago both the EU and UK engaged in some gentle public goading of each other.
Some slightly bellicose statements were made in front of the cameras and there was also some largely illusory economic sabre-rattling. It’s important to remember that these comments may not mean much. The positions politicians and negotiators adopt in public are often quite different to their private positions taken up in the meetings themselves.
While statements such “hard Brexit” and “make the UK pay” were rather liberally sprinkled around, it’s worth keeping in mind that both parties receive huge amounts from each other through trade. The wealth-generation and jobs this creates both in the EU and UK will be powerful influencers that will push the negotiators towards common-sense and win-win positions.
It simply won’t be in anybody’s interest to start a trade war or slap tariffs on anything.
The UK’s motor manufacturing industry is understandably and legitimately worried about what might happen if the negotiators aren’t sensible and instead kick off tit-for-tat tariffs. They are essentially asking for the ongoing maintenance of access to the free market.
As the health of the European and UK car manufacturing industries is directly linked to the car finance industry, these concerns should be noted by those engaged in providing car finance.
However, while the report majors on the impact on the UK motor industry, it’s almost inconceivable that the French and German governments will risk major job repercussions in their motor industries by making it difficult for their producers to sell cars here. One only has to look at the numbers of Peugeots, Renaults, Citroens, VWs, Audis and BMWs on the UK’s roads to see how difficult it would be for Paris and Berlin to be unrealistically tough on the UK motor industry.
A subsidiary concern arises from the Brexit changes on the global money markets and specifically London.
Companies lending money typically need to fund those loans by borrowing and ensuring on the wholesale markets in the City of London. If London’s position as an (or arguably “the”) pre-eminent financial centre is threatened by market moves to Frankfurt and Paris, then it might conceivably increase the cost of borrowing.
That position might also be impacted by Sterling’s decline in value against the US dollar, given so much money moving around the globe is based on the dollar.
At the present time, it’s difficult to say more because so little is known.
There doesn’t appear to be any obvious cause for gloom relating to vehicle borrowing costs going up or finance being harder to obtain. Yet that position could change if the politicians lose sight of the mutual dependencies of the UK and EU economies.
The position will be watched with interest.hire purchase (HP) finance agreement , the lender is the legal owner of the vehicle right up until the point where the finance has been fully settled. This means that if you want to sell the car, you must arrange for an early termination of the HP agreement. You should start by letting the finance company know of your plans and arrange for a settlement figure to be drawn up, which will tell you how much you will need to pay them in order to fully settle your loan. UK law states that your lender must post a settlement figure to you within 12 days. As well as the settlement figure, you might also be charged an early repayment fee and an administration fee on top of this, if the lender stipulates, according to the agreement. However, despite these added expenditures, you should still find that paying off your existing loan early would nevertheless end up costing you less than the remaining payments would have. Selling a car under finance is extremely difficult (and ill-advised), since any sensible buyer or car dealership will check the Experian and HPI databases before they part with their hard-earned cash. These databases are used by buyers to receive the correct information about any used car they are looking to purchase, which will include information on finance history. At CarFinance Plus we are experts in financing cars for customers with all types of credit score – excellent, poor, bad, fair. We compare and find most competitive car loan offers on the market from top lenders. Please visit the car finance calculator to get a same day car loan quote.