Car buyers overcharged £1,100 by dealers for PCP finance, says watchdog
UK financial watchdog recently reported that many car buyers are being overcharged by more than £1000 when taking out a car loan.
This seems to be due to industry practice allowing dealers to set their own interest rates which has been “costing consumers £300m a year” said The Financial Conduct Authority. Dealers overcharge to boost their commission which results in customers paying significantly more for their motor finance.
The watchdog also found that many salesmen were neglecting to properly explain how the contract worked to buyers and not undertaking the correct assessment to see whether the consumer could afford to make the required repayments.
Jonathan Davidson, the FCA’s director of supervision, said: “We also have concerns that firms may be failing to meet their existing obligations in relation to pre-contract disclosure and explanations, and affordability assessments. This is simply not good enough and we expect firms to review their operations to address our concerns.”
The Financial Conduct Authority (FCA) said it is now considering changes to the way in which commission works after uncovering “serious concerns”.
“The lack of transparency for customers is enabling car dealers to line their pocket at the customers’ expense which is an unacceptable practice,” says John Collins, Managing Director of Bira Bank.
If you’re thinking of taking a car loan soon, it certainly provides some food for thought on what to look out for.
At Bira Bank, we offer car loans and a personal, first-class service. You can talk to Bira Bank’s specialist advisors Frank and David about any questions or queries you may have about your vehicle loan. There is complete transparency in everything we do as you would expect from a trade association.
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