Back in April, the Financial Conduct Authority (FCA) put temporary measures in place to help consumers get through the financially difficult period by introducing a three-month payment freeze for those with a finance agreement in place on a car.
The FCA also told companies not to attempt to end agreements or repossess vehicles during the freeze.
Christopher Woolard, interim Chief Executive at the FCA, said: “We know many people are suffering financial pressures brought on as a result of the coronavirus pandemic. The measures we’ve announced are designed to provide people affected with short-term financial support through what could be a very difficult time. The changes will provide support for consumers with credit cards, loans and overdrafts, facing temporary financial difficulties because of the pandemic.
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“Customers should think carefully before making use of these measures and only do so if they need immediate help. Where they can still afford to make payments, they should continue to do so.
“We know there is still more work to be done, and we will be announcing further measures to support consumers in other parts of the credit market in the future, including in the motor finance sector next week.”
What is the future of the car finance industry?
But what does this mean for the future of the industry, and how will the pandemic change the way finance agreements are conducted?
A dramatic digital transformation has already been apparent in the automotive sector; while finance companies have utilised their digital platform to enhance their businesses for many years, they have never had to rely on it as they do now.
While there will come a time when the sector will return to normal, it’s expected that this will instead be a ‘new normal’, which will further increase the relationship between the digital landscape and the car finance industry.
Sales processes will continue to remain the same, with customers quickly being funnelled into the showroom, but the most influential lenders will ensure that they’re able to provide this outside of the normal route.
How does the car finance industry recover from Covid-19?
With less face-to-face interaction, lenders must discover unique methods to relay deals to consumers. An accessible and user-friendly platform will be crucial to ensuring consumers are being provided with a journey that they’d have expected to be taken on before coronavirus impacted the sector.
Not only will lenders need to make certain that they are optimised online for desktop and tablet, but they will also have to focus on creating mobile-friendly sites to engage their users. The digital mobile reach has been on the rise throughout the past decade and the pandemic, and its aftermath of it, may only continue that trend.
Of course, dealers can still call consumers and speak to them directly, but they will have to get them through the ‘digital door’ first. They have to provide prospective consumers with the detail they need, while also staying on trend with the ever-changing finance rates to make sure that they are not losing potential customers to their competitors.
Additionally, it’s inevitable that the consumer will have to take on a series of online tasks to complete their new finance deals. From document uploads to proving their ID, consumers will want these processes to be as comfortable and easy to manage as possible.
If these submissions become stressful, and dealers aren’t able to create a fluent experience, then consumers may lose trust and walk away. In this new environment, where parts of it may end up remaining permanent, auto lenders cannot afford to fail digitally.