The government has been urged to take action to open financial support to lenders as it emerged that consumers are struggling to pay off loans during the coronavirus pandemic.
The Finance and Leasing Association (FLA) warned that the consumer new car finance market received eight per cent less business in February 2020 compared with 2019.
Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The economic impact of the coronavirus is expected to lead to a contraction in consumer spending in the second quarter of this year greater than in any quarter during the financial crisis.
“In recent weeks consumer finance providers have seen a huge rise in requests for forbearance.
“Motor finance is provided by a wide range of both bank and non-bank lenders who serve consumers and businesses across all sectors of the economy. The FLA is calling for urgent action by the Government and Bank of England to open up financial support schemes to all lenders, including non-banks, so that they can continue to provide new lending and meet the huge demand for forbearance.”
The coronavirus pandemic could hit the automotive industry particularly hard because the vast majority of all new car sales are paid for through finance deals. In the 12 months to February 2020, the FLA says almost 92 per cent of new car sales were financed through one of its members.