There are many complex reasons for the recession, and it cannot be narrowed down to one, nor can it be blamed upon one set of individuals. However, in this case, the focus is upon the banking structure and its affects on the marketplace. How did we get this far? And how has Carlyle Finance succeeded so well in this difficult economic climate?
Before September 2007, we lived in a country that had experienced strong or perhaps rather fast, economic growth. Regardless of your employment status, income or deposit, it was easy to get a loan or a mortgage. Northern Rock was quite famously known for lending 125% mortgages to sub prime customers, persuading them that soon the value of the property would be higher than the debt they were facing. Both mortgages and personal borrowing made the average household debt 160% of income- double the 1997 level. This is the highest in British history and in any developed country. Naturally, property prices inflated as demand became higher and for a while, the promise was proved. It was too good to be true.
Northern Rock was able to lend so much because it borrowed money it didn’t have, to gain fast growth in the marketplace. It built itself on a flawed model that astonishingly lent to customers that didn’t even need to prove they were employed. Northern Rock grew so fast that other banks had to keep up with its competitiveness and so followed in a similar fashion. However, this business model can never last for long and in September 2007, Northern Rock collapsed. This was the start of many banking disasters, creating distrust amongst many bank customers.
Since then, whilst the government has lent to banks to prevent them from collapsing, they have also warned them to rebuild their capital reserves and lend responsibly, along more traditional lending lines. By doing so, they will be in a far more stable position and less likely to fail in the future. Although this has prevented some people from being able to borrow what they could previously, not just for mortgages but personal loans, it is this method that has been considered vital to sustain a stable economy.
The motor industry is one of many that have been particularly affected. With fewer new cars being bought it is consequently down by 44% compared with the peak in 2003, and with the end of the scrappage scheme approaching this could fall again. Further, dealer finance declined in value by 17% between 2003 and 2008.
Despite the industry fall in finance sales, Carlyle Finance has grown as a dealer finance provider and proved that it is a credible, trustworthy player. Karl Werner, Head of Sales and Marketing says, “unlike the tactics some employed during the boom, Carlyle Finance has always lent responsibly, at fair prices and with effective management of treasury funds. It is because of this that it can continue to help you finance your car. Carlyle Finance has built a strong reputation due to the quality of our decision-making and it is this that has allowed Carlyle Finance to be as strong as it is”.
Given the current banking crisis, loans are presently hard to come by. Taking out dealer finance means it will keep your credit line with your bank free, as well as keeping your savings intact, proving to be the most popular method in financing a car.
