GE Money picks up Senate's used car loan book

Used car lender Senate Finance has signed a deal with GE Money, freeing Senate's parent, Dorchester Pacific, to lend more in other sectors.

Under the arrangement GE Money will start financing Senate's lending book while Senate will continue to operate as a loan broker and to service its network of dealers and customers.

There will be no impact on existing loan arrangements with customers.

A wholly owned subsidiary of Dorchester Pacific, Senate lends in the Auckland used car market, and was previously funded exclusively by Dorchester.

"It's business as usual at Senate," Dorchester Pacific chief executive Andrew Walker said.

"This is very positive news for that operation, because what we've done is we've managed to put together a deal with a very sound and credible organisation such as GE that underpins the Senate operation moving forward."

Dorchester had been looking to re-position Senate for about a year, Mr Walker said.

"I looked at the market that was shrinking and our ability to compete in that market with our cost of funds, and realised that we could put our capital to work more effectively in different areas of lending.

"We realised the way for us to move forward was to find a funding partner that's got a lower cost of funds and is really wanting to expand into that market.

"We end up in a fantastic situation - where GE has stepped into the treasury function that Dorchester Finance once had - and we preserve the relationship with the dealers and act as a broker and derive income from that operation."

Mr Walker said that like all finance companies Dorchester Pacific had been fielding quite a few phone calls from nervous investors.

The company was well-positioned, however, to take advantage of the market as it inevitably consolidated.

In the past year Dorchester had bought a 25 per cent stake in St Laurence and was selling its property trust, which would release about $15 million for acquisitions.

"We certainly believe that there are opportunities," Mr Walker said.

- © Fairfax NZ News