UK Car Lending

Paragon Motor Finance and CarMoney double their retail loans

Paragon Bank’s Motor Finance division and Car Money, backed by Peter Vardy, both saw their retail lending soar in the first half of their fiscal year.

A total of £75.7 million was lent by Paragon Banking Group’s auto finance division in the six months to the end of March 2022, more than double the amount lent during the comparative period in 2021 and 6% above the value in the second half of 2021.

CarMoney, meanwhile, oversaw £35.8m of loans made to customers over the same period, up from £17.9m last year.

Paragon’s Motor Finance revealed its loan book stood at £236.2m at the end of the period, up from £220.4m the previous year.

Julian Rance, Managing Director of Paragon Motor Finance, said: “We are pleased with the recovery the market has seen since dealerships reopened following the lifting of COVID-related restrictions.

“This has created a surge in demand for used vehicles, which has translated into strong asset values ​​in the used market. Supply issues in the new car market have exacerbated this situation. »

CarMoney, which moved into a new headquarters earlier this year, revealed it added 300 new dealerships to its network in 2021, resulting in 3,949 vehicles being financed in the quarter, compared to 2,461 the last year.

It also counts eBay Motors Group and Exchange and Mart among its partners and appears on comparison sites such as Confused.com.

CarMoney Managing Director Alastair Grier said: “We are steadily capturing a growing share of a strong market across the UK, having increased our workforce from 71 to 128 and added our presence on sites such as CompareTheMarket and GoCompare during this period. We expect to announce other partnership agreements during the year.

Alastair Grie, Managing Director of CarMoney“We continue to disrupt the market across the UK by applying technology to take the pain out of buying a car by helping customers navigate the process smoothly, from choosing the right vehicle from a respected dealership until the best financial package is in place.

“More recently, we have focused on helping customers finance electric cars and have partnered with ZoomEV, the electric vehicle sharing platform that brings together electric vehicles and sharing economies to fight climate change.

“In terms of changing customer behaviors, we have noticed that more and more customers are asking for financing before looking specifically at cars in their quest to clarify monthly payments and how much they can afford. This may be an early manifestation of a growing awareness of the cost of living, but it is still just the beginning.

In data released last week, the Finance and Leasing Association (FLA) said it still expects higher car-buying activity in the second half of the year, despite expectations that spending will slow in an environment of rising inflation, interest rates and taxes.

The FLA revealed that consumer car finance new business volumes fell 1% year-on-year in April (to 596,135 units), with the value of new business rising 12% (to £11.14 billion). sterling) over the same period.

Paragon’s half-year business results revealed that its operations grew over the period thanks to its first loans on static caravans, as well as its first electric vehicle financing products.

Total lending across Paragon Banking Group divisions rose 32.2% from the same period last year to £1.49 billion. The company’s pre-tax profits rose 49% to £143.6m.

Rance said: “The majority of our loans are usually in the second half of the year, so to top that number in our first half was particularly nice.

“I’ve also been encouraged by the steps we’ve taken in the electric vehicle segment, where we’ve gotten off to a good start. It’s a market that will only grow as the technology matures.”

A recent focus on finance in AM magazine explored how car retailers and lenders could keep car finance competitive in the face of rising Bank of England interest rates.

The special features also explored the changing role of a car dealership’s commercial manager as finance moves increasingly online.