The present day economy has had a devastating effect on the automobile business. Where ever you look it seems like the news is gloomy at best for the car business. The news seems to be full of reports of car companies having to lay of employees and close down factories. This scenario has forced the government to step in and take action and one of the ways it is doing so is by lending a helping hand to the car loan industry. Because of the poor state of the economy people either cannot afford to buy a car or if they want to, banks are not willing to help out with a loan for the simple reason that banks themselves are not in a good situation.

This drastic situation has led the Prime Minister Mr. Gordon Brown to sign a bill into effect which will let the government step in and bail out the car loan business. This means that when the law comes into effect British citizens could get help from the government or tax payers to buy a car. The primary reason for this action by the government is because they got a wake up call when Jaguar let off some 450 employees. This was the wake up call that triggered the whole process. So this means that lenders who give finance for car purchases will get access to funds from the Bank of England’s special liquidity scheme.

What this also means is that the government will allow the manufacturers also to have access to funds to help customers to purchase cars. This is however not a bail out for the car companies, it is strictly to help the motor vehicle finance wing of the car companies. In a given year there is nearly 20 billion pounds worth of sales of cars in the U.K. nearly half of this is done through loan companies. This is being done because of the near 50 percent fall in orders for new cars. The latest news as far as the government loan guarantee is concerned is that the U.K government will be giving the auto industry nearly 2.3 billion pounds as financial help.