With banks not learning from their past mistakes, a car finance crisis is just around the corner. Banks continue giving loans to even bad creditors. There is also the fear of sub-prime loans as well. With increasing complaints from customers over bad loans, the Bank of England has stepped in. Many guaranteed car finance garages have also sprung up to help customers find the right cars and the right loans.
Forcing Banks to Increase Their Finances
By handing out loans and PCPs, banks are putting themselves at the risk of bad loans. This is why the Bank of England has stepped in since banks themselves refuse to take charge. The Bank of England has asked all banks to increase their finances by another £11.4bn in the next two years. This additional financing is meant to secure banks against potential bankruptcy due to bad loans.
Banks are also asked to keep a substantial amount on hand for the next six months. This is because there is an immediate threat of a financial crisis taking place soon. Guaranteed car finance garages are to be utilised for better advice about the right loans and the right vehicles.
Bank’s Financial Policy Committee Takes Control
The Bank of England’s FPC has taken control on the issue of bad loans. It has declared that banks are to blame for the bad loans. This is because banks, supposedly, have become complacent about their lending. Instead, customers should approach guaranteed car finance garages for a better perspective. FCP has also worked to stop banks from getting around key tests so easily. Key tests are tests designed for the betterment of banks themselves. They are designed to stop the banks from lending too much to customers.
In short, banks are falling into the trap of bad loans themselves. They need to follow the changes implemented by the Bank of England to avoid disaster.