Motor Finance Market

With something like 30 million cars on the road in the UK, and with UK dealerships alone employing around 600,000 people, an effective motor finance sector is an important contributor to the UK economy.

Captives and Independents

Companies providing motor finance to the consumer fall into two main categories.         

When you buy a car using finance from the car manufacturer, these finance companies are known as ‘Captives’ – they are captive to that manufacturer’s range. They are a valuable route for car manufacturers to promote and support sales of their products.      

When you arrange motor finance from a company that isn’t tied into one manufacturer, such companies are known as ‘Independents’.      

Both types are members of the FLA.

Point of sale finance

Most FLA members supporting the motor sector offer finance and leasing agreements to car buyers via motor dealerships. This is often referred to as point-of-sale motor finance.       

Dealership staff are responsible for explaining the full range of finance and insurance products available in the dealership, and guiding customers to the products that best meet their needs and budget.     

The finance agreement offered will be based upon factors such as whether the customer can provide a deposit, whether the customer wishes to own the car outright at the end of the agreement or simply rent/lease. It will also reflect the customer’s credit history. A customer’s credit history – or credit record – is reviewed as part of a the underwriting process and is an important element in deciding whether finance is approved or declined.

Wholesale (floor planning) finance

Some FLA members also provide what is known as Wholesale Finance. This provides temporary funding to dealerships, financing their stock of vehicles while they are in the showroom. Wholesale finance is essential to dealership cash flow. It also provides a valuable service to the consumer by maximising the breadth of choice available within the showroom.      

FLA members providing motor finance include banks, subsidiaries of banks, the finance arms of motor manufacturers and non bank-backed organisations.