The evolving role of value-added products in Car Finance

On Wednesday 20th May, ahead of the Car Finance Awards, Sponsored by Warranty Solutions Group, industry leaders from across the car finance ecosystem gathered for a roundtable discussion focused on the future of value-added products (VAPs). Against a backdrop of regulatory scrutiny, tighter margins and changing customer expectations, the conversation explored how lenders, retailers, brokers and technology providers are adapting their approach to ancillary products.

While opinions differed on some areas, several clear themes emerged throughout the discussion: transparency, affordability, timing within the customer journey, and the need to reposition protection products as genuine customer benefits rather than sales add-ons.

Regulation is driving caution - But also uncertainty

One of the strongest themes was the impact regulation and Consumer Duty are having on the market.

Participants agreed that the underlying products themselves still offer significant customer value, particularly in an environment where affordability pressures are increasing and customers are keeping vehicles for longer. However, many businesses are becoming increasingly cautious about how products are sold, funded and presented.

A recurring concern was the lack of clear regulatory guidance. Several attendees noted that businesses are unsure where regulatory expectations sit, particularly around product funding structures, fair value assessments and customer presentation.

This uncertainty is already reshaping the market:

• Dealers are facing constant changes to lender rules around what can and cannot be financed
• Businesses are becoming more risk-averse around product sales processes

At the same time, many around the table felt the industry risks becoming overly focused on compliance mechanics rather than customer outcomes.

As one attendee summarised, the core issue should remain simple:

“If the product delivers fair value and improves the customer outcome, what’s the problem?”

Customers still need protection - Perhaps more than ever

Despite the scrutiny surrounding ancillary products, there was broad agreement that customer need has not diminished.

If anything, economic pressures may be increasing the relevance of protection products:

• Customers are holding onto cars for longer
• Repair costs are rising
• Used car prices remain elevated
• Consumers are more exposed financially if something goes wrong

Warranty products were highlighted repeatedly as particularly important in today’s market, especially for used vehicles and near-prime or subprime customers who may struggle to absorb large unexpected repair bills.

GAP insurance also remained a major topic of discussion. While the product has faced significant criticism publicly, many attendees argued that misconceptions around GAP have overshadowed its genuine value to consumers.

Several examples were shared of customers facing substantial financial shortfalls after vehicles were written off - situations where GAP insurance could have prevented major financial hardship.

The consensus was clear: the issue is not necessarily the products themselves, but how they are positioned and explained.

Transparency and timing are critical

The discussion repeatedly returned to one central point: customers respond better when products are introduced naturally and transparently throughout the buying journey - not simply added at the end of the transaction.

Many participants criticised the traditional “last-minute add-on” approach, where customers are presented with multiple products just before signing paperwork.

This creates:

• Buyer fatigue
• Seller fatigue
• Reduced engagement
• Lower trust
• Poor customer understanding

Instead, attendees argued that protection products should be introduced contextually and earlier in the customer journey.

For example:

• Discussing alloy wheel protection when talking about parking habits
• Explaining GAP insurance in the context of vehicle depreciation and finance exposure
• Highlighting costs throughout the journey 

One attendee noted:

“Customers don’t see it as a hard sell - they see it as protecting something valuable they’ve just bought.”

However, there was also recognition that regulation has complicated this approach. Some retailers reported being advised to delay VAP conversations to avoid perceptions of bundling products into finance agreements too early.

This tension - between customer education and compliance caution - remains unresolved across the market.

Affordability and payment flexibility are becoming essential

Another major theme was the growing importance of affordability and payment flexibility.

Attendees agreed that customers increasingly think in terms of total monthly outgoings rather than individual product costs. Buyers are balancing:

• Vehicle finance
• Insurance
• Fuel costs
• Household expenses
• Protection products

In that environment, spreading the cost of VAPs has become increasingly attractive.

Subscription-style and monthly payment models were discussed extensively, particularly as alternatives to large upfront costs. Many participants felt customers are far more comfortable with smaller recurring payments than significant one-off purchases.

There was also strong support for providing customers with multiple funding options, such as:

• Upfront payment
• 10 or 12-month interest-free instalments
• Longer subscription models
• Bundled monthly solutions

Several attendees argued that customer choice itself may become a key compliance safeguard, allowing consumers to select the affordability structure that best suits their circumstances.

The group also noted a wider behavioural shift, particularly among younger consumers, who are increasingly comfortable spreading costs across multiple payment solutions in other areas of life.

The customer journey remains fragmented

Technology providers in the room highlighted another challenge: the customer journey itself is still highly fragmented.

Modern vehicle purchasing involves multiple parties, each often operates with different systems, processes and requirements.

Participants agreed that while online research and digital purchasing continue to grow, the VAP journey remains inconsistent and often disjointed.

Interestingly, several attendees challenged the assumption that customers want a fully digital experience. While buyers increasingly begin their journey online, many still value human interaction when discussing more complex financial or protection products.

The strongest sales outcomes were often linked to consultative conversations rather than purely digital transactions. That said, there was optimism around how AI and conversational interfaces could improve education and engagement in future journeys by allowing customers to ask questions naturally without feeling overwhelmed by lengthy documentation.

Bundling products may improve customer understanding

Another area of debate centred around product complexity.

As VAP offerings continue to expand - from warranty and GAP to cosmetic protection, tyre cover, wear-and-tear packages and service subscriptions - customers can quickly become overwhelmed.

Several participants questioned whether the industry is offering too many standalone products.

Bundled propositions were widely viewed as a potential solution:

• Easier for customers to understand
• Simpler sales process
• Reduced fatigue
• Clearer value proposition

Rather than presenting a long menu of separate products, attendees discussed creating more holistic “vehicle protection packages” tailored to customer needs.

EVs present a major future opportunity

Towards the end of the discussion, attention turned to electric vehicles and the growing used EV market.

Participants agreed that EVs could represent one of the biggest future opportunities for protection products.

Many consumers remain nervous about:

• Battery degradation
• Repair costs
• Long-term reliability
• Unknown maintenance expenses

Even where fears are exaggerated through the media, perception matters. Large headline figures around battery replacement costs are already influencing customer behaviour.

This creates an opportunity for warranty providers and retailers to build confidence into used EV purchasing journeys through tailored protection products and clearer education.

A shift from “Add-On” to “Customer Benefit”

Ultimately, the roundtable concluded that the industry may need to rethink how it talks about value-added products altogether.

The term “add-on” itself was challenged repeatedly during the discussion.

Protection products were seen not as secondary extras, but as tools that:

• Reduce customer risk
• Improve affordability certainty
• Protect essential assets
• Support customer retention
• Enhance long-term ownership experience

The businesses likely to succeed will be those that can balance:

• Transparency
• Fair value
• Customer education
• Flexible affordability
• Strong customer service
• Regulatory confidence

As one attendee summarised:

“It’s about moving away from just selling a product and instead showing customers how you’re protecting something important to them.”

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