AS A DIRECT result of meltdown in the financial sector this year, many institutions tightened up their lending rules and regulations and though few in the financial industry will openly admit it, borrowing has become more difficult, writes Shane O'Donoghue
Or at least that's the story being told by Irish car dealers struggling with massive reductions in car sales.
Figures have been quoted to Motors, varying from one in three successful car finance applications, to as few as one in five.
Gerry Hargadon, head of sales at Permanent TSB Finance, puts a different spin on the situation: "There is a definitive lack of retail customers since September. The country is gripped by fear, with most serious buyers biding their time." When questioned about the possibility that less finance applications are being approved, Hargadon suggests the figure is down to "poor quality customers" applying for finance, resulting in skewed anecdotal evidence.
He also remarks that it may be easier for hard-pressed dealers with a forecourt full of used cars to blame the finance companies rather than accept yet another trade-in they can't sell.
Mark McKenna, a sales executive at Des D'Arcy Motors in Dublin, is acutely aware of the glut of second-hand cars on the market, and admits that dealers now find themselves having to be very choosy about what cars they accept as trade-ins and at what price.
Buyers are effectively in "negative equity" on some models, as the value of their car now is not what it was predicted to be when they originally bought it on a previous finance package.
Not only that, but despite the banks saying they are open for business and that their methods of determining who is credit worthy have not changed, McKenna points out that most buyers now need to stump up a hefty deposit.
This is in stark contrast to the previous situation, even as recently as the start of 2008, when finance companies were happily accepting minimal deposits.
According to McKenna, finance agreements were "all about volume before, but now the proposals need to be rock solid".
However, he believes that a much bigger effect is the decline in buyer confidence, as evidenced by a distinct lack of showroom traffic, which though not uncommon during the month of Christmas shopping, is a markedly different situation to this time last year.
Saying that, McKenna points out that it's impossible to know what's going to happen at the start of 2009.
Traditionally, more buyers pre-order their cars ahead of the registration plate change in January, though that's clearly not happening on a grand scale this year.
However, it's possible that the outlook will improve once the New Year comes, especially with the interest rate dropping in buyers' favour, reducing the cost of living.
Group finance and insurance manager of the MSL Group, Davy McFeely, agrees that this time of year is always an unusual one in the motor trade, with "less creditworthy" buyers applying in larger numbers for some reason, which has the effect of reducing the acceptance rate overall.
McFeely also mentions the potential effect of finance companies altering their score card in a bid to hit targets.
Commenting on the Halifax's new car loan winter sale, Bernard Kingston, head of intermediary business at Bank of Scotland, told Motors categorically that there have been no changes to its creditworthiness parameters for a long time: "Simply put, there are a lot less people asking for finance since the second half of 2008 - in line with new car sales."
In contrast to the general belief that banks are slow to lend money, Kingston says that "the best lending is done at the depths of a recession; people are more conservative in their outlook. So long as the institution has money to lend, it will". The Halifax loan sale isn't the only incentive on the market, with several others attempting to stimulate both lending and car sales.
Although it will be difficult to fully grasp the situation until after the first three months of 2009, it's safe to say that the serious car buyer will be greeted by a wide variety of bargains right now, on both new and used models, and also in terms of the method of financing.
Whether that buyer has the confidence to take advantage of the situation remains to be seen.