Why won't car dealers accept third party finance?

FindMyWayBack

MrFrugalFever said:

FMWB, if you rang me at my dealership, I’d welcome you in and discuss your payment options and accept whatever method you wished to use providing it was NOT actual physical pound notes!

edited..

Yeah glad you edited, I was just about say, thanks for that. Isn't it strange how some responders are blaming me, oh dear 

MrFrugalFever

I do find it very odd though that you are having such bother with it, personally I’ve not heard of it other than with maybe a few small time independents that are family run and can decide on who, what and how with just their own reputation on the line.

whether the money is coming from a savings account, credit card, personal loan, finance company or dealer partnered finance company is all kind of irrelevant in the grand scheme of things. The dealer partnered finance will always be most attractive to them because it generates additional commission for the dealer, which is just the finance company paying a fee for the introduction of a client to its business, the finance companies are the true winners in all this with their interest rates!

FindMyWayBack

MrFrugalFever said:

I do find it very odd though that you are having such bother with it, personally I’ve not heard of it other than with maybe a few small time independents that are family run and can decide on who, what and how with just their own reputation on the line.

whether the money is coming from a savings account, credit card, personal loan, finance company or dealer partnered finance company is all kind of irrelevant in the grand scheme of things. The dealer partnered finance will always be most attractive to them because it generates additional commission for the dealer, which is just the finance company paying a fee for the introduction of a client to its business, the finance companies are the true winners in all this with their interest rates!

You're not kidding it's odd. I could understand it if the finance company were 'dodgy loan shark.com' but they are not. It is however a finance company and not a bank loan, they would pay the dealer.The first  to refuse was an independent, since then there have been several main dealers and a supermarket type. There are quite a few articles about this on the internet. It's not just me. Oh yes and because I want to avoid high interest I went down the route of sorting it out for myself, or so I thought.

CSL0183

FindMyWayBack said:

MrFrugalFever said:

I do find it very odd though that you are having such bother with it, personally I’ve not heard of it other than with maybe a few small time independents that are family run and can decide on who, what and how with just their own reputation on the line.

whether the money is coming from a savings account, credit card, personal loan, finance company or dealer partnered finance company is all kind of irrelevant in the grand scheme of things. The dealer partnered finance will always be most attractive to them because it generates additional commission for the dealer, which is just the finance company paying a fee for the introduction of a client to its business, the finance companies are the true winners in all this with their interest rates!

You're not kidding it's odd. I could understand it if the finance company were 'dodgy loan shark.com' but they are not. It is however a finance company and not a bank loan, they would pay the dealer.The first  to refuse was an independent, since then there have been several main dealers and a supermarket type. There are quite a few articles about this on the internet. It's not just me. Oh yes and because I want to avoid high interest I went down the route of sorting it out for myself, or so I thought.

I think it is just you. 

It makes absolutely no sense, not one little bit infact. You’re practically saying that these main dealers will only sell you a car on the basis that you use their finance. 

So if Bill Gates walked in and said he wanted to buy their stock with cash, Bill would be told (just like you are) that his cash isn’t good enough and that he needs to sign up to all their crazy finance deals. 

It’s absurd. 

If you can pay cash then you can pay via 3rd party finance, it’s exactly the same. Money is transferred into their account in the exact same manner. If you are having problems then you need to question their cash vs 3rd party policy and ask them what the difference is. 

I think it’s just you personally. 

(I won’t post on your thread again but yes, I’m calling BS on this entire misconception of yours ) 

***My point above relates to mainstream main dealers, Audi, BMW, Mercedes etc, not small “Backstreet Barry types” that may have their own shady practices or even Car Supermarket types who try and push you towards their expensive finance packages and put you off using cheaper alternatives*** 

Herzlos

I think dealers are potentially worried about being scammed when dealing with unknown finance companies.

Dealer provides bank details to buyer

Buyer sets up finance, paid into dealers bank account

Buyer drives car away

Finance turns out to be a short term loan taken out by the dealer.

Finance company starts reclaiming money from dealers bank account.

Dealer loses money and car.

So it's potentially safer for them to deal with a small set of known finance companies.

FindMyWayBack

https://www.credit-connect.co.uk/industry-opinion/competition-removing-dealer-restriction-access-to-third-party-finance/
https://www.express.co.uk/life-style/cars/1114432/Car-finance-investigation-UK-lease-mystery-shopper

~Brock~

This is actually more common than people seem to realise and it is due to questions relating to regulation and legal liability. 

Most large dealerships will have a number of existing arrangements with different lenders, usually covering the whole prime-subprime spectrum.  They will be familiar with these arrangements and will have trained their staff in how to interact with each company and how their processes work. 

These are not the same as unsecured cash loans directly to the customer.  When a car is bought with HP/PCP finance - where the dealer is paid directly - the finance company is actually buying the car directly from the dealer in order to hire it back to the customer.  This often overlooked aspect is covered by a separate agreement between the dealer and the finance company and will indemnify the lender in the event of the vehicle not being of satisfactory quality, or if FCA regulations aren't followed correctly.  Basically, many dealers won't enter into this type of contract and incur this potential liability with lenders who they are not familiar with.

Also, in larger multi-branch dealerships the choice of finance partners is controlled centrally and individual branches are likely to be prohibited from entering into these arrangements with lenders that are not on their approved list.

MrFrugalFever

~Brock~ said:

This is actually more common than people seem to realise and it is due to questions relating to regulation and legal liability. 

Most large dealerships will have a number of existing arrangements with different lenders, usually covering the whole prime-subprime spectrum.  They will be familiar with these arrangements and will have trained their staff in how to interact with each company and how their processes work. 

These are not the same as unsecured cash loans directly to the customer.  When a car is bought with HP/PCP finance - where the dealer is paid directly - the finance company is actually buying the car directly from the dealer in order to hire it back to the customer.  This often overlooked aspect is covered by a separate agreement between the dealer and the finance company and will indemnify the lender in the event of the vehicle not being of satisfactory quality, or if FCA regulations aren't followed correctly.  Basically, many dealers won't enter into this type of contract and incur this potential liability with lenders who they are not familiar with.

Also, in larger multi-branch dealerships the choice of finance partners is controlled centrally and individual branches are likely to be prohibited from entering into these arrangements with lenders that are not on their approved list.

Most of that in part is correct, depending on the type of dealership will depend on what lender is used primarily, however, the OP’s position is such that they claim their 3rd party funding is being rejected.
as far as I’m concerned, providing the customer can prove the funds are coming from a legitimate source and they’re not rocking up with over £9,000 in cash pound notes, the money is just as good as in house finance funding.

FindMyWayBack

Well here we are again, back to the OP claims this and that, I don't claim it, it's a fact and it's happened in main dealers, family owned and car supermarkets as the big spender called them.
Thank you for believing me Brock.

SeanG79

OK, so the reason some dealers refuse to accept 3rd party finance is because they get paid a commission/referral for finance that they arrange on your behalf. 

Instead of only making money on the "metal", they earn money on the finance and extras like GAP insurance, extra Warranties, etc.

I assume some dealers price their vehicles assuming they will earn finance commission and so need this income to make the sale viable, but maybe they are just greedy...

Not accepting a 3rd party finance is likely a breach of FCA guidelines, so possibly reminding a dealer of this will have them reconsider.