“Traditional lenders are just not set up to take account of some of our customers’ more complex financial arrangements, where salary is only part of the story,” says Selig, who trained as a chartered accountant and has a master’s degree in engineering.
I’ve met him at Romans International, a luxury and supercar dealer based in Surrey. A Ferrari LaFerrari is an arm’s length away from my perch on the showroom sofa, and in front of it is a Porsche 918 Spyder, a pair of Ferrari SF90 Stradales and a McLaren Senna. Seeing these and all the other uber-expensive cars on the forecourt, it’s hard to believe we’re in the midst of a supercar drought, as Selig claims.
“In my 20 years financing cars, I’ve never seen the level of demand we’re experiencing now,” he says. “Applications for our finance are running 50% higher than our highest peak in the past six years. The market is overheated and cars are in short supply.”
Reasons for this, he says, include people rushing to spoil themselves after the restrictions of the past 16 months and the fact that while many people have suffered during the pandemic, quite a few have actually increased their fortunes.
At the same time, the ongoing global shortage of semiconductor computer chips has stalled deliveries of new models, forcing buyers to consider nearly new cars instead.
“You will wait nine months for some new versions of Porsche 911,” he says, “while the £30,000 discount that was available on a new Rolls-Royce Cullinan a few months ago has evaporated. Dealers are fighting over the best used cars and prices are rising. My fear is that premiums will begin creeping in, which is when people start paying more for cars than they’re worth.”
JBR’s most popular arrangement is a lease purchase deal – a form of hire purchase but with a balloon (or deferred) payment. The value of the balloon, which is calculated at the start of the deal, can’t be more than the car is likely to be worth at the end of it, because unless the customer intends to pay it to own the car, it’s settled using the proceeds from the car’s sale. “Ideally, a customer will have some equity to put towards their next deposit,” says Selig.