A BMW finance director has told the RTE radio show that car loans are no longer in “the realm of viable”.
Speaking to the Radio One Breakfast show on Friday morning, Mr Felsbach said that while he would like to see more of the car industry adopt finance as a tool for the future, “the whole concept of finance has been around for many years and it’s no longer viable”.
He said that the current banking system was not the best model for financing a car, with the current rates of interest on car loans, he said, “at least for a while”.
The BMW finance vice-president added that, although he could understand why some people might prefer to invest in a car with an established history, he believed “it’s going to be more of a luxury thing for a lot of people”.
Mr Felsbaum added that the idea of buying a car was still “in the realm” of “a luxury thing”.
However, he noted that BMW has recently introduced a car financing service called Revolve, which is available to its customers.
Mr Flesbach also suggested that “we need to be looking at a hybrid, a hybrid vehicle that can drive from the dealership to the customer, with a few extras”.
The RTE presenter then asked Mr Flesberg how he thinks the industry would be able to cope with the challenges posed by car loans.
“I think that it will be very difficult to get all of the things that you need to do right,” he said.
“You need to get a good credit rating, you need insurance, you have to have a good car loan, but then you also need to pay for your car when you buy it.”
Then you need some of the insurance and you also have to pay to have it repaired.
“He added that if a car is bought with a good loan, “you’re not going to pay off it in five years, because it’s going into a collection account.
“It’s not going into your bank account because that’s a good thing to have.”
Mr Falsbach also said that it would be “very difficult” for people to get car loans when the average interest rate on a car loan is currently 4.2 per cent.
Mr Caruso said that “people need to understand” that “this is an industry that’s been around and we’re very lucky” that it “has a lot to offer”.
He added: “I’m not saying this is the future for finance but I do believe that we need to make some changes to this.”RTE understands that the BMW finance executive was speaking about a potential introduction of Revolve.
The service is available for all BMWs and many other models, and is a new offering from BMW that offers loans at a cheaper rate than the standard car finance deal.