Brexit is coming, and while the UK is still in the EU at the time of writing, that could change any day now. Brexit is going to affect many industries across the UK, so what about car finance? Here is some information on the impact it could have.
Concerns in the Automotive Industry
So far, there is very little detail to go on. The car finance industry has not been mentioned much in Brexit news in the same way as other industries like travel and agriculture.
However, the automotive industry as a whole is very concerned about the impact Brexit will have. Tariffs could have a big impact, and access to the free market could be badly affected.
The car manufacturing industry has a strong impact on the car finance industry, so anything that affects manufacturing is likely to have an impact on finance as well.
But the truth is that the UK is very important for the car manufacturing industries in other European countries like Germany and France, so hopefully, the impact will not be too severe.
The Big Issue: The Value of the Pound
Companies that lend money usually have to fund the loans by borrowing using the wholesale markets in London. London is a huge financial centre, and it could be threatened by Brexit, which could, therefore, lead to an increase in the cost of borrowing.
But the major issue that looks like it could have the biggest impact on the car finance industry is the changes to the value of the pound. Ever since the results of the Brexit referendum came in, the pound has plummeted in value against the dollar and euro.
Financing has become more expensive as a result. Cars that are imported from the EU or rely on parts sourced from the EU have gone up in cost. As a result, financing costs have increased as well, and this could continue if the pound falls lower.
Always Shop Around
Due to the uncertainty surrounding Brexit, the same rules apply when looking for financing. Always look around for a good deal. Prices may rise, but smart shoppers will find the best deals. Don’t just look at the price of the car, and make sure you look at the different finance deals available.
It may also be worth saving up a larger deposit to help offset the cost of financing your car after Brexit. Start putting some money aside now, and this could help you get a better deal with all the uncertainty at the moment.
The Future Is Unclear
A lot of the issues surrounding Brexit remain unclear, and it’s the same for the car finance industry. We still don’t know what kind of Brexit we will get, what kind of deal will be agreed, or even if there will be no deal at all.
What seems clear now is that the major concern surrounds the value of the pound and how it is affected by Brexit. In a no-deal scenario, the value could drop further, and this could push up the price of financing a car. On the other hand, a good deal could actually see the pound rise in value. So it looks like we will just have to wait and see what happens.