With the economy already at high risk of a recession, consumer confidence likely to be adversely affected and range of other negative effects, there is a strong chance that leaving the EU could affect the motor finance sector substantially, explained Paul Burgess, CEO.

He said: “It is not a political comment to say that even the best hard Brexit outcome would be bad for the economy and the worst could be very damaging. Almost no economic experts see a positive effect in the short-medium term.

“This is likely to influence all aspects of the used car market and motor finance will not be unaffected. Given historical precedents, underwriting rules are likely to be tightened just at the point in time when used car retailers really need some additional flexibility.

“That is why we believe that the kind of flexible lending that we provide could prove to be an essential part of any dealer lending panel over the coming year and beyond. Because our whole approach is based on a form of underwriting that is more holistic in approach, we will often be able to help when traditional motor finance providers cannot.”

Paul said that the situation would become even more acute if a hard Brexit caused effects such as noticeably higher unemployment or an increase in defaulting on loans.

“All of these will impact on used car buyer credit scores which is something that we saw after the financial crisis. There will undoubtedly be a demand for motor finance from people who have encountered these problems and more flexible motor finance is the only solution without turning to the high rates and tough conditions of sub-prime lenders.”

Paul explained that Startline’s flexible approach was based on identifying motor finance customers who the company believes to be strong credit risks but often do not meet the requirements of prime lenders because of their work patterns or socio-economic factors.

He said: “Our view is that the motor finance sector has been lagging a little way behind the manner in which work and home ownership patterns are changing for some time. Our approach is to spend more time looking at these people in order to build up a comprehensive and realistic picture of whether they are a good risk.

“We are able to offer these borrowers rates and general conditions that are comparable with prime lenders and certainly a world away from the sub-prime sector.

“In a post-hard Brexit scenario, we will be able to bring this understanding to bear in a manner that we believe will potentially be very beneficial to used car retailers and their customers. While we certainly won’t be able to help everyone, there will be a worthwhile percentage of customers rejected by prime lenders that will fall within our range.”