Banks, an amazing way to screw us
In the current financial crisis and recession the UK banks, most of which have now been taken into partial public ownership, are still failing to provide finance to lease cars and vans to private customers and small businesses.
Leasing companies in the UK are going bankrupt in their hundreds every month because these private/publicly owned banks refuse to lend the monies that have bailed them out. I find it incredulous that any Government could allow this to happen.
We are now faced with the situation that 86% of all customers who are proposed for prime leasing are declined and have to be placed into non status leasing agreements. In the same period last year we were seeing an opposite trend whereby 71% of clients were being accepted to lease their new cars. Whilst I understand fully that underwriting criteria has to be tightened to mitigate against future losses to the banks, I do not understand why leasing customers are being penalised. You see with leasing a future value is placed on the car or the van and the bank will set the actual future value of the vehicle at around 85% of the predicted value. So this means that the risk is minimal. The leasing sections of banks are very profitable. Take one UK bank, who also own a leasing company. In 2007-2008 sales were up 42%, profit 39% and bad debt down by 77%.
The banks are now apportioning blame to leasing brokers for bad debt. One bank in particular has stated to me that it was because of brokers sending bad finance proposals that the bank actually wrote the bad debt. Excuse me but brokers are not responsible for underwriting decisions, that’s the bank’s job. The broker is there to introduce possible business to the bank.
Most of our customers now have to go for a sub prime car leasing arrangement through no fault of their own.
I personally think that it is long overdue that banks are called to account for their actions. If any other business faces going out of business then the Government turns its back and offers no help.
