Six month results ending July 2018 for used car financier Advantage Finance show over half a million loan applications were received by the company in that time.
Grimsby-based Advantage Finance is a branch of motor finance and bridging lender S&U, who also posted a record group revenue of £44.5m, up 23%.
For Advantage, net receivables reached a record £263.5m, with a record profit of £16.3m. While loan applications increased 16%, customer numbers were at a record 58,000. Acceptance levels now stand at 25%, down from 31% in 2017. Advantage’s overall transaction rate as a percentage of applications received is just 2.3%, down from 2.8% in the first half of least year.
Of more concern was that impairments on used vehicles rose at a higher level than anticipated, to 24.7%. S&U chairman Anthony Coombs said: “Current evidence on early repayment from customers acquired this half year with tightened underwriting, points to a gradual return to the lower impairment of recent years.”
An analysis of revenue and profit before taxation shows that motor finance still makes up the massive majority of S&U’s income. Revenue for the six months ending July 2018 showed that 43.2m of total revenue derived from motor finance, compared to just £1.19m from property bridging finance.
At Advantage Finance, the expected credit loss under IFRS9 adjustment was £3.05m. Loan loss provisions brought forward under IFRS9 brought forward under IFRS9 was £47.5m.
Point-of-sale finance for car finance grew 6% year-on-year to 194,000 vehicles in July, Finance and Leasing Association (FLA) figures show, keeping the sector on a growth trajectory despite stale sales in new car retail.
Total value of advances for the month also grew, rising 11% to £2.8bn.
The new and second-hand segments fared equally well. New car finance rose 10% £1.3bn in value, while volumes rose 5% to 68,786 units.
Used car finance grew even faster, with values up 13% to £1.5bn and volumes up 6% to 125,153 vehicles.