Used-car sales driving demand for finance
Despite rising prices and supply chain issues, the vehicle finance market remains solid, with strong demand for used cars – and brokers are being urged to explore loan options for their clients
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SUPPLY CHAIN problems mean people wanting to buy a new car are now waiting up to a year for delivery.
But non-bank lenders Liberty and Pepper Money say demand for loans hasn’t dropped – more people are buying used cars, and they are turning to online sales to transact.
Liberty group sales manager John Mohnacheff and Pepper Money general manager of asset finance Ken Spellacy discuss the market, loan products, and how brokers can assist clients.
A lucrative market
“Supply chain issues continue to affect the vehicle finance market throughout the country, but perhaps less so than you might expect,”
Spellacy says the other big factor is the skyrocketing freight costs for transporting these vehicles to Australia.
“All of these factors contribute to an increase in used-car demand, and we'll continue to see strong used-car values in the near term.”
Spellacy says Pepper Money is still experiencing strong demand from customers wanting to finance new and used vehicles, with the number of loans settled per month well above pre-COVID levels.
“Our asset finance business has never seen stronger origination volumes, fuelled by our technology investments, partnerships, broker and introducer presence, and our focus on the rapidly growing EV market.”
There has also been an accelerated shift in the past two years to online research and online purchasing and financing of vehicles.
“Our investment in technology has enabled us to enhance our service offering and customer experience, allowing our introducers to deliver faster outcomes for our customers,” says Spellacy.
An opportunity to diversify
Vehicle finance is an excellent service for brokers to add to their repertoire, as it can truly open so many doors, says Mohnacheff.
“Not only is it a brilliant standalone service, particularly for customers with more bespoke needs, but it can also be a highly rewarding value-add to offer existing customers.
“We know that approximately a quarter of customers who take out a home loan or refinance an existing loan will also look to upgrade their car in
up 8.2% to 1,768
New vehicle sales by state/territory, Mar 2022
Tailored loan products
Liberty provides an extensive range of vehicle finance options designed to suit all kinds of customer needs, and its loans can also be used to fund fleet cars, trucks, and vans for commercial purposes, says Mohnacheff.
“We provide a streamlined service with fast turnaround times. And, where a customer has more unusual circumstances, we assess their individual circumstances to help find a suitable solution and support them to get financial.”
Liberty’s competitive loan options can be tailored to suit a range of requirements, whether the vehicle is new or used, or the customer is a prime borrower or has a complex history.
“Provided the customer meets the relevant criteria, we also accept younger borrowers,” Mohnacheff says.
Pepper Money finances a wide range of vehicles – cars, bikes, caravans, and boats. In the commercial space it provides finance for business assets, including cars, rigid trucks, yellow goods, and earthmoving.
Spellacy says its introducers, brokers, and customers tell Pepper Money that its market-leading turnaround times and service levels set it apart.
“We do our best to make things as simple and stress-free as possible for our introducers with policies, processes, and technology that are easy to work with.”
This tech includes a full suite of APIs, a robust credit auto-decisioning engine, an integrated e-signing solution for customers, and digital ID verification, which has created efficiencies and helped more customers succeed – 77% more customers than in the same period last year.
Growing appeal of electric vehicles
Pepper Money finances electric vehicles for private, sole trader, and company applicants, with zero monthly or ongoing fees.
“Since 2015, our EV loans have been helping environmentally conscious Australians contribute to a more sustainable future,” Spellacy says. “Today we finance approximately one in nine EVs sold in Australia and are the first of two finance companies that are members of the Electric Vehicle Council.”
Pepper Money is passionate about providing options for a sustainable future, and it’s been recognised industry-wide, says Spellacy, with its EV offering winning the Canstar Green Excellence Award for 2022.
“There are so many growth opportunities for brokers in the EV space, and I don’t see it slowing down,” he says. “Sales of new EVs in Australia have tripled in the past 12 months off the back of state government rebates, discounts, and a more competitive domestic market driving down prices.”
Mohnacheff says it’s exciting to see electric vehicles gaining popularity in Australia – and, as with other other new cars, the greatest barrier is the limited supply.
“However, as this changes, it’s likely that demand will continue to grow, with more customers taking advantage of the many benefits electric vehicles have to offer,” he says.
All Liberty motor loans can be used to fund EVs. While each state government offers different financial incentives to buy an electric vehicle, Mohnacheff says it’s important for brokers to recognise that the loan application process remains relatively the same.
“Growing interest in this space means there is ample opportunity for brokers becomes experts in this largely underserviced pocket of vehicle finance,” he says.
As a leading Australian non-bank lender, Liberty offers innovative solutions at competitive prices to support customers with greater choice. Over the past 24 years, this free-thinking approach to loan solutions has seen more than 600,000 customers get finance across a wide range of home, car, personal, and business loans, as well as SMSF lending and insurance products. Liberty remains the only non-bank lender with an investment-grade credit rating offering custom and prime solutions to help more people get finance.
Find out more
Pepper Money is a non-bank lender with businesses in Australia and New Zealand. Pepper Money provides a variety of home loan options, as well as car loans, personal loans, loans for professional equipment, and commercial loans. In 2021 Pepper Money listed on the Australian Securities Exchange (ASX: ticket PPM).
Find out more
the next six months,” Mohnacheff says. “When supporting business and commercial customers, it’s always worth asking whether they require commercial vehicle lending support.”
Spellacy says vehicle financing provides brokers with more opportunities to meet the needs of their customers, develop deeper relationships with them, and become their go-to advisors for financial expertise.
“Not only can they create clients for life, but by expanding their scope of work and cross-selling products they have potential for greater income commission outcomes when compared to other markets such as residential mortgages,” he says.
Training, support for brokers
Vehicle loans are quite similar to home loans in terms of the need to understand the customer’s real-life circumstances, says Spellacy.
“You’re either dealing with a PAYG customer’s payslip or an SME whose cash flow and expenses change day to day and week to week. Key differences are the shorter loan terms ranging from zero to seven years; the fixed rates that last the life of the loan; and no minimum deposit required for majority of asset loans.”
“Our asset finance business has never seen stronger origination volumes, fuelled by our technology investments, partnerships, broker and introducer presence, and our focus on the rapidly growing EV market”
Ken Spellacy, Pepper Money
In Partnership with
“At Liberty, we’re certainly seeing an increase in applications for used-car loans, and vehicle finance in general remains remarkably steady,” Mohnacheff says.
Spellacy says there’s been a global trend of insufficient supply following the economic impacts of COVID-19, together with the conflict in Ukraine.
“Car makers continue to suffer from manufacturing and supply chain issues, particularly where factories have been forced to close and shipping operations are yet to fully recover – reflected in the extended delivery times for new vehicles,” he says.
He adds that as demand for new cars remains strong, there is little discounting at dealerships.
% change in average sale price of used vehicles
Spellacy says Pepper Money’s flexible approach to lending and risk-based pricing, combined with its quick turnaround times, has been designed to help brokers arrange straightforward finance solutions for their customers.
“We also have BDM support who are dedicated to showing brokers how to get started and keeping them informed of our offering and market conditions.”
Mohnacheff says the general process for vehicle financing is very similar to mortgage broking.
“While it’s important to develop a comprehensive knowledge of the different vehicle finance options available, the application process, lender liaison, and customer service aspects remain the same,” he says.
Liberty’s Do More program provides brokers with a fantastic leg-up and equips them with all the information they need to build vehicle finance into their businesses.
“Our motor-lending BDM team are available to help provide solutions for any complex scenarios and support business partners to deliver a gold standard of customer service,” Mohnacheff says.
The road ahead
While vehicle supply chain issues are predicted to continue into the second half of the year, Mohnacheff says it’s only a matter of time until this issue is resolved.
“We’ll soon see an influx of new vehicles hitting the market, which means that now is an opportune time to prepare.”
Despite supply challenges, Spellacy says Pepper Money is still experiencing strong customer demand, and reports show that the vehicle finance market is only growing.
“Brokers that are looking for ways to add to their proposition should not miss this opportunity to broaden and deepen their customer relationships. There’s a lot of value in providing a holistic service for customers.”
“We know that approximately a quarter of customers
who take out a home loan
or refinance an existing
loan will also look to upgrade their car in the
next six months”
John Mohnacheff,
Liberty
says Mohnacheff.
“Although dealerships are quoting 12-month wait times due to the reduced number of new cars entering the country, consumer demand remains strong.”
Mohnacheff says buyers are choosing to accept the extended wait periods rather than missing out on their dream new cars, while others are opting for second-hand vehicles.
He says across the board, valuations of second-hand cars have increased significantly – and despite the ongoing fluctuation in fuel costs, the used-car market has become highly lucrative.
Industry experts
Ken Spellacy
Pepper Money
John Mohnacheff
Liberty
Industry experts
John Mohnacheff is Liberty's ebullient, knowledgeable and charismatic group sales manager. With over 30 years of insurance, banking and finance experience, he is committed to improving the sales habits and disciplines of the entire Group Sales team. Before joining Liberty, Mohnacheff held executive roles at Westpac and Bank of Melbourne. He has a Bachelor of Business degree and a Master’s in Marketing from the University of New England, as well as a Postgraduate Diploma in Organisational Behaviour from the University of NSW.
Liberty
John Mohnacheff
Ken Spellacy has over 25 years’ experience in the asset finance industry, successfully leading sales, credit and operational teams. He joined Pepper Money in 2015 in the role of head of credit and settlements for its asset finance business, and in 2019 he was appointed general manager of asset finance. Spellacy is responsible for the strategic direction, operational delivery and financial performance of Pepper Money’s asset finance business. Prior to joining Pepper Money, he held senior leadership roles at various financial institutions, including Capital Finance, St. George Bank and Westpac.
Pepper Money
Ken Spellacy
Ken Spellacy
Pepper Money
John Mohnacheff
Liberty
Industry experts
John Mohnacheff is Liberty's ebullient, knowledgeable and charismatic group sales manager. With over 30 years of insurance, banking and finance experience, he is committed to improving the sales habits and disciplines of the entire Group Sales team. Before joining Liberty, Mohnacheff held executive roles at Westpac and Bank of Melbourne. He has a Bachelor of Business degree and a Master’s in Marketing from the University of New England, as well as a Postgraduate Diploma in Organisational Behaviour from the University of NSW.
Liberty
John Mohnacheff
Ken Spellacy has over 25 years’ experience in the asset finance industry, successfully leading sales, credit and operational teams. He joined Pepper Money in 2015 in the role of head of credit and settlements for its asset finance business, and in 2019 he was appointed general manager of asset finance. Spellacy is responsible for the strategic direction, operational delivery and financial performance of Pepper Money’s asset finance business. Prior to joining Pepper Money, he held senior leadership roles at various financial institutions, including Capital Finance, St. George Bank and Westpac.
Pepper Money
Ken Spellacy
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John Mohnacheff
Liberty
Ken Spellacy
Pepper Money
Ken Spellacy has over 25 years’ experience in the asset finance industry, successfully leading sales, credit and operational teams. He joined Pepper Money in 2015 in the role of head of credit and settlements for its asset finance business, and in 2019 he was appointed general manager of asset finance. Spellacy is responsible for the strategic direction, operational delivery and financial performance of Pepper Money’s asset finance business. Prior to joining Pepper Money, he held senior leadership roles at various financial institutions, including Capital Finance, St. George Bank and Westpac.
Pepper Money
Ken Spellacy
John Mohnacheff is Liberty's ebullient, knowledgeable and charismatic group sales manager. With over 30 years of insurance, banking and finance experience, he is committed to improving the sales habits and disciplines of the entire Group Sales team. Before joining Liberty, Mohnacheff held executive roles at Westpac and Bank of Melbourne. He has a Bachelor of Business degree and a Master’s in Marketing from the University of New England, as well as a Postgraduate Diploma in Organisational Behaviour from the University of NSW.
Liberty
John Mohnacheff
Tasmania
up 5.2% to 27,155
Victoria
up 5.3% to 10,016
Western Australia
down 6.2% to 1,560
ACT
down 0.8% to 32,224
NSW
down 1.7% to 21,214
Queensland
down 0.1% to 6,380
South Australia
down 0.2% to 916
Northern Territory
Total new vehicles sold in Australia in Mar 2022
101,233
Total new vehicles
sold in year
to Mar 2022
262,436
(down 0.5% on previous year)
Source: Federal Chamber of Automotive Industries
10%
Jun-21
Aug-21
Oct-21
Dec-21
Feb-21
Apr-21
20%
30%
40%
50%
Source: Datium Insights-Moody’s Analytics Used-Vehicle Price Index
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Training, support for brokers
Vehicle loans are quite similar to home loans in terms of the need to understand the customer’s real-life circumstances, says Spellacy.
“You’re either dealing with a PAYG customer’s payslip or an SME whose cash flow and expenses change day to day and week to week. Key differences are the shorter loan terms ranging from zero to seven years; the fixed rates that last the life of the loan; and no minimum deposit required for majority of asset loans.”
Spellacy says Pepper Money’s flexible approach to lending and risk-based pricing, combined with its quick turnaround times, has been designed to help brokers arrange straightforward finance solutions for their customers.
“We also have BDM support who are dedicated to showing brokers how to get started and keeping them informed of our offering and market conditions.”
Mohnacheff says the general process for vehicle financing is very similar to mortgage broking.
“While it’s important to develop a comprehensive knowledge of the different vehicle finance options available, the application process, lender liaison and customer service aspects remain the same,” he says.
Liberty’s Do More program provides brokers with a fantastic leg-up and equips them with all the information they need to build vehicle finance into their businesses.
“Our motor lending BDM team are available to help provide solutions for any complex scenarios and support business partners to deliver a gold standard of customer service,” Mohnacheff says.
Copyright © 1996-2022 Key Media, Inc.
Companies
People
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About us
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Contact Us
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News
MORTGAGE INDUSTRY
BEST IN MORTGAGE
SPECIALTY
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US
CA
AU
NZ
UK
Copyright © 1996-2022 Key Media, Inc.
Companies
People
Newsletter
About us
Authors
Privacy Policy
Conditions of Use
Contact Us
RSS
News
MORTGAGE INDUSTRY
BEST IN MORTGAGE
SPECIALTY
TV
Resources
US
CA
AU
NZ
UK