Welcome Car Finance to concentrate on its own outlets
Welcome Car Finance, which specialises in loans to those with a poor credit rating, has withdrawn funding from hundreds of independent dealerships and is to concentrate on its own outlets.
The group aims to focus on this business as it is more profitable than providing finance to third-party dealers.
The move by the group will mean the thousands of motorists looking for cheap finance will be disappointed.
The company, which is part of Cattles, said it had experienced a flood of customers to its 12 dealerships from smaller lenders.
The group said the move did not reflect any shortage of funding because of the credit squeeze.
David Gregory, founder of the blogging site Car Credit Complaints, said the majority of the sub-prime car market relies on Welcome Car Finance so around 60%-70% of dealers will find this a devastating blow.
Consumer choice will also suffer. Whereas those with a poor credit rating could previously turn to hundreds of dealers, they will now only be able to chose between the dozen Welcome dealerships, added Mr Gregory.
On a Welcome Car Finance loan, the typical APR is 19.9%, which is roughly the same as borrowing on a credit card.