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The UK’s decision to leave the European Union is predicted to have a profound effect on both the economy and the everyday member of the public.

Car Finance: The Brexit Effect

UK Car Finance
25, Sep 2019

To suggest that any kind of EU exit after five decades of membership would not be without its consequences simply isn’t realistic. In fact, businesses and entire sectors spanning the United Kingdom are already feeling the shockwaves of Article 50’s initial impact.

One of which being the automotive sector.

Some are predicting that any kind of Brexit will plunge the UK into recession. Others are less pessimistic, but nonetheless see a period of short-term economic hardship as an absolute minimum. Consumers in general have been spending far less since the EU referendum, particularly when major purchases and investments are concerned.

This lack of consumer confidence (and on-going uncertainty) has had a particularly dramatic impact on new car sales. Evidence suggests that people simply do not want to take the risk of investing heavily in new vehicles, when they have little to no idea what’s coming next. Even today, just a few weeks from the supposed Brexit deadline, there’s no way of predicting how things will look if and when the UK’s EU exit goes ahead.

Plummeting New Car Sales

The decline in new car sales in itself is nothing new. Even just a year or so after the Brexit vote, new car sales were plummeting by the month – often by as much as 10%. Figures published by The Society Of Motor Manufacturers And Traders (SMMT) were accompanied with a clear and urgent warning – the government has a responsibility to provide post-Brexit assurances as soon as possible.

Unfortunately, this doesn’t seem like something that’s going to happen. Nobody knows how things will play out, so fewer people than ever before are willing to take risks on an unknown.

The car sales in general have remained relatively steady, though more buyers than ever before are opting for flexible finance deals. Used and nearly new cars have become a more appealing proposition for concerned consumers, while the flexibility of a structured finance deal can go some way to augment the risks of a heavy outright investment.

In addition, many industry experts have predicted an inevitable tightening of underwriting procedures in the wake of Brexit. At a time when consumers are likely to need more flexibility and affordable deals, it could become significantly harder to qualify for car finance. Hence, rather than waiting for this to happen, some are hurrying to lock down the best possible car finance deals, before Brexit takes an even bigger toll on the sector.

Independent Advice

Realistically, even the most experienced broker or car finance specialist cannot make any concrete post-Brexit assurances for the time being. However, now really is the time to seek independent advice on affordable car finance if considering purchasing a vehicle over the next few weeks or months.

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