Car Finance brokering

[Yasou1985]

Hi all

Finally received my FCA authorisation and putting the pieces in place to get set up.

I have been told to get more people onboard rather than go in solo. My aim is to go it alone for a period and see what momentum I get.

I will be grateful if anyone can share any advice on what challenges I will face early days of the this sector.

Many thanks

 

[Financial-Modeller]

...I have been told to get more people onboard rather than go in solo...

Who told you that? On the face of it, it seems like bad advice.

Do you have agreements in place with funders?

 

[Yasou1985]

Who told you that? On the face of it, it seems like bad advice.

Do you have agreements in place with funders?

I think they were referring to the operations side i.e talking phone calls, customer enquiries. I am at the application stage with 2 lenders but looks promising. Not expecting crazy volumes as a start up so I feel like I can manage on my own. Just wanted other people's opinions on this.

 

[Financial-Modeller]

Perhaps wait until you cannot cope with the workload before going out hiring people.

 

[Gordon - Commercial Finance]

Challenges you will face -

Focusing only on car finance, you will have to work very hard for small rewards, and you will need to push big volumes to make it worthwhile.

Motor finance is competitive, restrictive and very heavily regulated. Commission is capped, and consumers are tight.

Motor dealers will make things as difficult as they can for you. They will drag their heels on producing invoices and even try and charge your customers additional fees for not using their finance. Because that's how car dealers make money.

 

[JEREMY HAWKE]

You would also end up wasting a lot of time with a lot of uncredit worthy individuals !
It is so easy to get finance at decent rates at the moment on vehicles.
The difficulty now is finding those vehicles

 

[Mark T Jones]

To second @Gordon - Commercial Finance this is probably the most competitive area of asset finance plus you will largely be handling regulated transactions- which will mire you in compliance and paperwork (and fees)

2 specific hurdles

1. Fierce online competition with cut-throat rates

2. The dealer factor - in addition to what Gordon has said, there us a simple psychology the even she'd people become gibbering idiots and will sign whatever is put in front of them when they are in a showroom looking at their shiny new car

If you add sourcing you can deflect somewhat.

The broker who I know are successful in this field specialise in specific areas, eg high-value classics or used commercials


I have the knowledge and connections to do car finance but I choose not to for the above reasons

 

[Gordon - Commercial Finance]

I have the knowledge and connections to do car finance but I choose not to for the above reasons

Yes same here. I actively avoid car deals! Just last week I had an existing business client ask me to sort a car for him....and I agreed. Then I had the absolute joy of dealing with an Arnold Shark salesperson to try and get an invoice! What a palava....
Usually if existing clients ask me to sort cars for them I suggest they use the dealer's funding, because its just not worth it most of the time.

 

[Advisor1]

I work with a vehicle logistics company that deals with some major online dealers. It's not easy out there, but, working with the right business partners, you can do well

Very good luck

 

[Mark T Jones]

I think they were referring to the operations side i.e talking phone calls, customer enquiries. I am at the application stage with 2 lenders but looks promising. Not expecting crazy volumes as a start up so I feel like I can manage on my own. Just wanted other people's opinions on this.

I'd certainly give some though to joining an umbrella operation for compliance and some back-office functions.

 

[Yasou1985]

Thank you everyone for your insight really valuable information here.

I will try to avoid dealers as much as possible then. I am setting up a separate company that will source vehicles and I will provide the finance through my brokering business. I only have permission to broker finance and not sell goods at the moment.

Also would anyone consider doing a consultation/advisory service in the industry?

 

[Financial-Modeller]

You seem to be approaching this in a very difficult and unconventional way.

Out of curiosity, what will be your USP?