Latest news with #vehiclefinance
Yahoo
04-07-2025
- Automotive
- Yahoo
Secure Trust Bank exits new lending in vehicle finance
UK-based Secure Trust Bank is set to exit new lending in the vehicle finance market, impacting 284 roles by 2030. The move comes as the motor finance industry faces scrutiny over commission disclosure practices in the UK. Secure Trust Bank said its decision is expected to impact its financial results positively. The bank plans to place its existing vehicle finance book, valued at £558.3m ($761.6m) as of December 2024, into run-off. The vehicle finance segment generated a company loss before tax of £21.8m in FY24. On an unaudited pro forma basis, the group anticipates an increase in adjusted profit before tax to £56.6m from £39.1m. Additionally, the group expects an estimated 800 basis points increase in return on average equity (ROAE) before reinvesting the released capital from the motor finance business. Secure Trust Bank said it will continue to support its existing customers and loan portfolio in vehicle finance. As of 30 June 2025, the average consumer loan length outstanding was 37 months, with the longest contractual loan agreement being 60 months. The unit accounted for approximately 30% of the group's adjusted operating costs in FY24, and the bank plans to save more than £25m of operating costs by 2030. Secure Trust Bank stated it would consult with impacted colleagues, with 284 roles at risk by 2030, including 78 roles at risk in FY25. Restructuring costs of approximately £5m are anticipated. Vehicle finance will be reported as a non-core activity in the FY25 results and beyond. A further update will be provided in the group's interim results for the six months ended 30 June 2025, due to release on 14 August 2025. Secure Trust Bank CEO David McCreadie said: 'We have made the difficult decision to stop new lending in vehicle finance, our lowest-return business line, and to redeploy capital to our three higher-returning businesses of retail finance, real estate finance and commercial finance. "This pivot will allow the group to prioritise these established specialist businesses and achieve further simplification of the group, combined with the removal of a significant level of costs. These measures will have a material positive impact on ROAE for the group and will position the group to be capital accretive." According to the Finance and Leasing Association, the consumer new car finance market fell 7% in terms of new business value and 8% in volumes in April 2025 compared to April 2024. However, new business volumes in the new consumer car finance market were up by 11% in the first four months of 2025 compared to the same period in 2024. In contrast, the consumer used car finance market saw a 4% decrease in new business value in April 2025 while volumes grew by 2%. "Secure Trust Bank exits new lending in vehicle finance" was originally created and published by Motor Finance Online, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Reuters
02-07-2025
- Automotive
- Reuters
UK's Secure Trust Bank to stop new lending in vehicle finance
July 2 (Reuters) - Britain's Secure Trust Bank (STBS.L), opens new tab said on Wednesday it would stop new lending in vehicle finance, signalling a strategic shift as the bank withdraws from an underperforming segment amid industry-wide uncertainty after a court ruling on motor finance. London's Court of Appeal ruled in October that motor finance brokers must fully inform customers about commissions on new car loans, leading some lenders to temporarily pause writing and collecting such loans. Shares of key motor finance providers Close Brothers (CBRO.L), opens new tab, Lloyds (LLOY.L), opens new tab and others fell sharply after the ruling and Secure Trust Bank shares plunged to a record low of roughly 348 pence in November. The company warned about profit in November and said the pause in loan collections led to a higher volume of loans reaching default status and added that while it had restored collections to normal levels, it was taking longer than expected to recover funds. Since then, its shares have recovered. Early on Wednesday, the shares jumped nearly 5% to 836 pence. The lender's vehicle finance segment accounted for about 30% of its adjusted operating costs in 2024 and posted a loss before tax and pre-exceptional items of 21.8 million pounds ($29.9 million). On Wednesday, it said it will continue to support its existing customers and loan portfolio in vehicle finance, adding that it expects 284 roles to be at risk by 2030, including 78 roles in 2025. As at June 30, the average consumer loan length outstanding for vehicle finance was 37 months and the longest contractual loan agreement was 60 months, Secure Trust Bank said. The firm expects to incur restructuring costs of about 5 million pounds and said it will streamline its cost base as the loan book runs down, enabling more than 25 million pounds of operating costs to be removed by 2030. ($1 = 0.7286 pounds)
Daily Mail
02-07-2025
- Automotive
- Daily Mail
Car finance lender quits market after commissions scandal sparks industry upheaval
Secure Trust Bank plans to cease activity in the motor finance market to focus on more profitable business after the sector was rocked by a commissions scandal. A watershed Court of Appeal ruling last October declared that lenders could not hand car dealers commissions without a customer's informed consent. Until 2021, most vehicle purchases involved the use of discretionary commission arrangements, which enabled dealerships and brokers to set the interest rate on a buyer's finance agreement. This incentivised brokers to charge consumers higher rates, regardless of other factors, such as the loan's value, length of agreement, or a customer's credit score. The Court of Appeal's decision has left the vehicle finance industry worried it might be hit with a huge compensation bill. Ratings agency suggests the sector could end up paying £30billion, while one senior Financial Conduct Authority lawyer estimates it could surpass the £50billion banks paid to settle PPI claims. Following an appeal against the October court decision, the Supreme Court is set to bring a final judgement on the matter sometime this month. Secure Trust told investors on Wednesday its commercial banking firm is halting all lending within the motor finance segment and allowing the existing portfolio to run off. It claimed the move 'reflects the historical financial performance and medium-term outlook' of the vehicle finance division, which incurred a £21.8million loss before tax and exceptional items last year. STB believes the pivot would have increased its adjusted pre-tax profits in 2024 from £39.1million to £56.6million and its return on average equity by 800 basis points. The Solihull-based company hopes to eliminate over £25million of operating costs by 2030 from running down its motor finance loan book. Over the same timeframe, 284 positions will be at risk of redundancy, including 78 this year alone. The lender intends to redirect capital to more 'higher-returning' businesses, including retail finance, commercial finance, and real estate finance. David McCreadie, chief executive of STB, said the 'pivot will allow the group to prioritise these established specialist businesses and achieves further simplification of the group, combined with the removal of a significant level of costs. 'These measures will have a material positive impact on ROAE for the group and will position the group to being capital accretive.' 'We will be consulting with impacted colleagues to explain why this pivot in our strategy will drive the future sustainable success of the group.' Secure Trust Bank shares were 6.8 per cent up at 852p on Wednesday morning and have climbed by around 140 per cent since the year started.
The Herald
01-07-2025
- Automotive
- The Herald
More young women are financing cars — see which makes are their top pick
Ford was the second most popular brand in 2015, but was overtaken by Toyota in 2020 and has since slipped behind Suzuki, which only entered the top 10 in 2020 but has quickly gained favour. 'Nissan has moved between positions four and seven, and is now at number five, while Haval and Chery find themselves in the top 10.' Luxury brands still hold sway. 'There is a demand for premium brands among younger consumers as Audi and BMW have retained spots in the top 10 over the past decade, though they have slipped slightly from where they were in 2015.' Younger buyers are also spending more. 'Since 2015 there has been a gradual increase in the average price point at which younger buyers were prepared to finance a vehicle purchase. In 2015 a buyer under 35 was prepared to finance a vehicle purchase at an average of just under R200,000, but in 2025 this has jumped to R321,500.' The data shows the average price of a used vehicle financed for a woman rose from R172,600 in 2014 to R297,800 in 2024. For new vehicles, the jump was steeper, from R252,000 in 2014 to R440,000 in 2024. TimesLIVE
Yahoo
11-06-2025
- Automotive
- Yahoo
The tax benefits of leasing vs. buying a car for your business
Tax deductions for business vehicles are numerous, whether you lease or buy. Leasing can be less expensive upfront and monthly, but leasing means you will never own the vehicle and build equity from the vehicle. In general, buying is a better move if you put a lot of miles on the vehicle, as leases can come with mileage limitations. As a business owner, you need to put more thought into whether you buy or lease than the average driver. All the standard questions come into play, of course. But there's more to consider, like what are the tax benefits of leasing vs. buying a car? First, start by deciding whether buying or leasing makes the most sense for your business. Ultimately, a vehicle purchase or lease is a big expense for your business. Look at the problem from all angles before committing. How much you drive: Lease contracts typically limit the number of miles the car can be driven to 12,000 or 15,000 miles per year. Once you exceed that limit, you may be penalized 10 to 30 cents per additional mile. Buying may be better if you drive a great deal for your business. Wear you'll put on the car: Lease agreements also require that the vehicle be kept in good condition. There could be additional charges if there's excess wear on your vehicle. If your industry beats cars up, consider buying. Perpetual monthly payments: If you continually lease one car after another, you will always have monthly car payments. But when you purchase a vehicle, you'll eventually own the car outright. On the upside, leasing gives you access to the newest car models with the latest technology features available. Leases allow you to access a new car every three years or so. In addition, because lease payments are generally less expensive than a traditional car loan, you may be able to afford a higher-end car. When you use a vehicle for business purposes, the IRS gives you two options for deducting associated expenses. You may use what's known as the standard mileage rate deduction, or you can opt to use the actual expenses deduction. You can swap from standard to actual expense from year to year for a purchased vehicle. However, you must stay with what you first pick when leasing. The standard mileage approach allows you to claim miles driven for your business on your federal taxes. The IRS announces the standard mileage rate that can be used to calculate the deductible cost of operating a car for business purposes every year. How much can you write off on a leased vehicle? For 2025, the rate is 70 cents per mile driven for business purposes. This means if you drive 15,000 miles for your business, you can deduct a total of $10,500. You can deduct state and local sales tax whether you buy or lease a vehicle. The way your business calculates it will differ. Sales tax is paid upfront for purchases and in monthly increments for leases. If you choose to itemize your deductions, you can deduct sales tax instead of income tax. Your business must choose one or the other. As with other deductions, there is an upper limit to the amount you can claim. For 2018 to 2025, that amount is $10,000. You may deduct the cost of monthly lease payments by using the actual expense deduction on your federal tax returns. The specific amount of the lease payment you can deduct depends on how much you drive the car exclusively for business. For example, imagine your monthly lease payment is $400 and you use the vehicle 50 percent of the time for business. You can deduct $200 per month as an expense. These benefits are only available if you sign on to a standard lease. You cannot claim this federal tax deduction if you take on a lease-to-own contract. Self-employed people and business owners can deduct interest on auto loans from their taxes. You must record every business trip, odometer reading and car loan payment to verify the amount of interest you pay. Like other deductions, car loan interest can only be included in your taxes if you opt for an actual expense deduction. Only purchased vehicles qualify for the depreciation deduction — and only when the actual expense deduction is used. The method of determining how much your car depreciated over the year is usually Modified Accelerated Cost Recovery System (MACRS). Like the mileage deduction, the depreciation deduction changes every year. For the 2025 tax year, the maximum depreciation you could deduct is $12,200 for standard depreciation. If you choose the special depreciation allowance, it is up to $20,200. It varies widely based on when the vehicle was placed in service. Review Publication 946 by the IRS to learn about the ways you can depreciate your vehicles and other property as a business owner. Actual expense rules also include the deduction of other expenses for your leased or purchased vehicle, including: Gas Oil changes. Vehicle repairs. Tire purchases. If your vehicle needs extensive maintenance or repairs because of business-related use, keep a careful record of it. This way, you'll know exactly how much you spent — and how much your business can save during tax season. The up-front and monthly costs for leasing a vehicle of the same make, model and year are often less than when buying it. Those savings can be redirected to other business needs and investments. But, leases have to end eventually — and your business is left without equity. With purchasing, you will someday own the vehicle and could sell it to recoup some funds. Leasing costs can also include early termination expenses if you need to end the contract early and excess mileage fees. Both options come with interest and other fees. The choice depends on your business's cash flow and how your business will need to use the vehicle. As with many aspects of running your business, there's no one-size-fits-all answer to whether leasing or buying has more tax advantages. Before investing in a car for your business, consider: How the vehicle will be used. Whether you can afford the upfront and long-term costs. The potential added fees. The tax benefits of leasing a car vs buying a car for business. You can use the auto lease calculator to see if it makes financial sense for you to lease. Alternatively, you can take a look at current auto loan rates. It's always wise to talk with a tax professional if your situation is complicated. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
