As banks make it more difficult to get any loans, the motor loan industry is definitely in the midst of a decline. More people are concerned about losing their homes and they are defaulting on their motor loans in an effort to make higher payments on their mortgages. The amount of those seeking a new motor loan is expected to drop by one million in 2008. That means that although more than 6 million people will need motor loans this year, the significant drop in new motor loans could affect car sales and banks.
Steven Baillie, Head of Loans at Sainsbury’s Finance, said: “It is difficult to pinpoint exactly what is behind this decrease and could be due to a mixture of factors such as concerns around much-publicised economic pressures or environmental anxieties.”
The report from Sainsbury’s stated in part, “The figures further reveal that 30% of the people who intend to purchase a vehicle over the next 6 months will finance at least some of their purchase through a loan. It is estimated that 18.2% of the spending on purchasing vehicles will be through personal loans, equating to around 8.67 billion - down by some 2.13 billion on 6 months ago.”
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