Car finance is still a relatively untapped area within the peer-to-peer lending market, but there are signs that the car lending segment is revving up.
Once viewed as the ‘next big thing’ in P2P lending, the car finance market faded somewhat with RateSetter’s exit.
RateSetter, which provided asset-backed finance for dealerships to stock up on cars, funded by its investors, left the market after Metro Bank completed the disposal of the platform’s car dealer finance loan portfolio, two months after the bank acquired RateSetter’s outstanding loan book. It is believed that the loan portfolio had an aggregate book value of £15m.
However, RateSetter was not the only alternative lender in this market. Zopa is the largest name in this space, offering car loans, as well as a personalised car hire purchase products.
Read more: Driving forward
Now, there are signs that a few new entrants are ready to launch their own car finance products.
Earlier this month, P2P consumer lending platform Lendable announced it has been working with car finance broker Zuto to develop a hire purchase product for vehicle buyers.
The product, called Autolend, uses an API from Lendable and is exclusively available through Zuto.
And Peer2Peer Finance News understands that at least one other company is working to create a P2P lending platform that provides finance to consumers needing credit for car purchases.
In November last year, William Rist, head of partnerships at Lending Works revealed that his platform will conduct research and development on the market, before considering whether to launch into this space.
This goes to show there is certainly room to launch into this market.
Lending volumes for new cars increased by 514 per cent year-on-year, while lending for old cars rose by 270 per cent.
These figures suggest there is plenty of room in the car finance market for agile lenders who can offer competitive rates. The borrowers are certainly out there, its just a matter of finding the right lenders, at the right price.