Credit restrictions impact used car market

Harder-to-obtain credit is having an unwelcome impact on the used car market as a growing number of potential buyers face refusal when applying for funds to finance their vehicle purchase.

As banks implement stricter lending policies to protect themselves during the economic downturn, consumers are finding it more difficult to obtain credit for purchases which involve borrowing significant sums of money.

This restriction on credit is inevitably impacting those wishing to take advantage of the attractive finance deals currently on offer.

Furthermore, there is a growing problem of negative equity which has also been taking its toll on the second-hand market. The dramatic drop in used car values has meant many now owe more on their finance schemes than the current value of the vehicle. Consequently, fewer people can afford a replacement and are instead opting to extend ownership of their existing car.

On a more positive note, customers are likely to find that dealers are more willing to negotiate on price and will be keen to provide the most cost-effective solution if it results in the completion of a sale.