Why won't car dealers accept third party finance?

SeanG79

~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.

Correct it is common. 

There is no additional liability to the dealer if they accept 3rd party finance. The vehicle has to be of merchantable quality irrespective of who the dealer invoices, it is covered by the Sale of Goods Act. 

If the customer brings their own 3rd party finance, the dealer is not liable under the FCA regulations, as they did not introduce the finance. So the Bank/Finance Company/Broker will need to comply with the FCA regulations. 

It all essentially boils down to the dealership losing out on the commission/referral fee for the finance. (and maybe a little extra admin if they are not accustomed to working with that funder).

MrFrugalFever

FindMyWayBack said:

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.

I am ON YOUR SIDE, not suggesting you’re lying.

i have said, twice now, that I work in a main dealer and money from a 3rd party is perfectly acceptable and just as acceptable. No finance commission earned but money is money....

not going to bother posting on here again, I consider the case closed AFAIC.

FindMyWayBack

MrFrugalFever said:

FindMyWayBack said:

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.

I am ON YOUR SIDE, not suggesting you’re lying.

i have said, twice now, that I work in a main dealer and money from a 3rd party is perfectly acceptable and just as acceptable. No finance commission earned but money is money....

not going to bother posting on here again, I consider the case closed AFAIC.

Hi, sorry, didn't mean to offend, Thank you for all your posts and comments.