Car dealers have started rethinking their lending panels as economic pressures start to spark a reduction in the number of customers meeting “prime lender criteria”.

Startline Motor Finance chief executive Paul Burgess claims that retailers are shifting their focus in a bid to maintain their appeal to customers amid the changing economic conditions during the last quarter of 2017.

Factors such as inflation, a rise in interest rates, stagnant wage growth, uncertainty over Brexit and sluggish economic growth are all having an impact, he said, adding: “There are some very clear signs that lender panel overhauls are taking place at leading dealer groups.

“The reasons for this are, by and large, very simple. Because economic conditions mean fewer applicants are meeting prime lender criteria, dealers are looking at other options.”

Burgess said that the newer dealer lending panels that were emerging were much more subtle and sophisticated than had traditionally been seen.

He said: “The old fashioned, dualistic prime/sub-prime approach is no longer fit for purpose for the modern dealer group, and those to whom we are talking are well aware of that fact.

“What they are trying to build today, as part of the process of realignment that we are highlighting, is a range of options that are designed to meet the needs of customers with different risk profiles.

“We see ourselves very much as fitting into that approach, sitting behind the prime lender, delivering for applicants who are good credit risks but may have, for example, unusual employment patterns or even simply not own a home.

“In our view, what is happening to dealers and lending panels at this point in time is long overdue. It is better for the customer and the dealer, too.”