Car finance reclaim

Brie

Sheriff23 said:

It is not clear to me why "Car finance reclaim" is being described as the result of a "scandal".  Surely when an individual signs a finance deal the rate of interest is clearly stated.  Whether or not this is boosted by a discretionary commission element is irrelevant as long as this is included in the agreed rate  If you sign a deal at the stated interest rate it means you have accepted said stated interest rate.
This once again smacks of PPI reclaims where agreements are signed without reading the small print which is entirely the fault of the person signing.  As with any agreement if you don't like the terms and conditions (including the small print) don't sign it!   I can say this as someone who refused PPI many years ago having read the small print and realised it was a waste of money (like most insurance) and who recently refused a car finance deal because the rate was not acceptable to me.

Yeah - I quite get that - caveat emptor or whatever.  But the problem with PPI and this finance reclaim is that people were lied to. 

With PPI - no you can't have a loan or credit card unless you sign up to this - without stating that the person telling you that is given a bonus for every PPI they get signed up.  Now I know that sales people get bonuses but one doesn't normally think of someone working in your bank as a sales person.  

With the car finance the interest that could be charged was a range that the sales person could decide on.  So say the interest range was 6% to 12%,  They say to the person buying the car "guess what, I like you so while I should sign you up for 12% interest I'm only going to do this at 10%"  And the buyer feels chuffed and accepts.  Or is horrified and says they can't afford it.  At which point the sales person goes to "ask their manager" and comes back and offers 8.5%, buyer wiggles and gets it down to 8% and thinks they got a good deal when in fact the product was set up with a possible 6% rate.  And the higher the % the more bonus to the sales person.  

And this is on top of the fact that most people don't know what an APR is or what it means to them in the long run.  Sales people operated on fear of losing out on a nice car that the buyer desperately needs to get to work etc.  

DullGreyGuy

Sheriff23 said:

It is not clear to me why "Car finance reclaim" is being described as the result of a "scandal".  Surely when an individual signs a finance deal the rate of interest is clearly stated.  Whether or not this is boosted by a discretionary commission element is irrelevant as long as this is included in the agreed rate  If you sign a deal at the stated interest rate it means you have accepted said stated interest rate.
This once again smacks of PPI reclaims where agreements are signed without reading the small print which is entirely the fault of the person signing.  As with any agreement if you don't like the terms and conditions (including the small print) don't sign it!   I can say this as someone who refused PPI many years ago having read the small print and realised it was a waste of money (like most insurance) and who recently refused a car finance deal because the rate was not acceptable to me.

The issue is the conflict of interest it creates and the fact that the buyer is unaware of the fact the finance company actually offered then 4.9% but the sales guy is saying its 9.9% as that doubles his commission and he really fancies buying a Rolex for a self birthday present. 

Recently the regulator has been asking lots of questions about conflicts of interest (at least to the insurance industry) and how we manage them (eg where we insure both parties in a motor accident and so could decide liability in favour of the uninjured driver to reduce our liability). So it's just on trend at the moment. 

Largs

I distincly remember being at Arnold Clark Automobiles with my mum when she was buying a car.  At the paperwork stage I asked the salesman what the interest rate was and he showed me papers with 6% on.  Upon leaving I was telling my mum that seemed a reasonabable rate (this was around year 2007 I think) but some time later I realised the APR was 9.9% - so am unclear what the 6% he showed me was.  I will need to dig out the paperwork and submit a claim for her 

Would she have still bought the car, probably yes, but they were not being transparent from the outset.  The only positive was, the little Citroen car had nothing spent on it and each MOT throughout its lifetime, the bill was never more than £200.

psychopathbabble

tried to quote… gave up.  In response to Brie… I can clearly remember being accepted for a loan on the basis I took a payment protection plan.

with this car stuff, I understand it’s down to the individual to decide if they are okay with the ‘interest rate’ but it doesn’t sit right that the dealers were pocketing some of that cash and the finance companies were allowing them to falsify interest rates in order to take that additional cash.  

If they said right the finance company is charging 5% and we are adding 2.5% for ourselves, would that be acceptable? I don’t think so! 

Nasqueron

psychopathbabble said:

tried to quote… gave up.  In response to Brie… I can clearly remember being accepted for a loan on the basis I took a payment protection plan.

with this car stuff, I understand it’s down to the individual to decide if they are okay with the ‘interest rate’ but it doesn’t sit right that the dealers were pocketing some of that cash and the finance companies were allowing them to falsify interest rates in order to take that additional cash.  

If they said right the finance company is charging 5% and we are adding 2.5% for ourselves, would that be acceptable? I don’t think so! 

You are 100% right BUT it didn't apply to everyone - hence the FCA consultation

Nasqueron

Largs said:

I distincly remember being at Arnold Clark Automobiles with my mum when she was buying a car.  At the paperwork stage I asked the salesman what the interest rate was and he showed me papers with 6% on.  Upon leaving I was telling my mum that seemed a reasonabable rate (this was around year 2007 I think) but some time later I realised the APR was 9.9% - so am unclear what the 6% he showed me was.  I will need to dig out the paperwork and submit a claim for her 

Would she have still bought the car, probably yes, but they were not being transparent from the outset.  The only positive was, the little Citroen car had nothing spent on it and each MOT throughout its lifetime, the bill was never more than £200.

Was that 6% a formal offer or an initial suggestion subject to credit check?

If they formally offered 6% and then it went to 9.9% it is suspect, if they said it was typically 6% subject to credit check, it might be entirely legitimate

psychopathbabble

Nasqueron said:

psychopathbabble said:

tried to quote… gave up.  In response to Brie… I can clearly remember being accepted for a loan on the basis I took a payment protection plan.

with this car stuff, I understand it’s down to the individual to decide if they are okay with the ‘interest rate’ but it doesn’t sit right that the dealers were pocketing some of that cash and the finance companies were allowing them to falsify interest rates in order to take that additional cash.  

If they said right the finance company is charging 5% and we are adding 2.5% for ourselves, would that be acceptable? I don’t think so! 

You are 100% right BUT it didn't apply to everyone - hence the FCA consultation

Oh I know that, it was just in response to the comment that surely by having agreed to that interest rate there is no issue.  The issue is the deception about what the money you were repaying was and where it went. 

DullGreyGuy

psychopathbabble said:

Nasqueron said:

psychopathbabble said:

tried to quote… gave up.  In response to Brie… I can clearly remember being accepted for a loan on the basis I took a payment protection plan.

with this car stuff, I understand it’s down to the individual to decide if they are okay with the ‘interest rate’ but it doesn’t sit right that the dealers were pocketing some of that cash and the finance companies were allowing them to falsify interest rates in order to take that additional cash.  

If they said right the finance company is charging 5% and we are adding 2.5% for ourselves, would that be acceptable? I don’t think so! 

You are 100% right BUT it didn't apply to everyone - hence the FCA consultation

Oh I know that, it was just in response to the comment that surely by having agreed to that interest rate there is no issue.  The issue is the deception about what the money you were repaying was and where it went. 

It's not a "deception", there is no requirement for commissions to be disclosed, the issue was how the conflict of interest was dealt with. 

Nasqueron

psychopathbabble said:

Nasqueron said:

psychopathbabble said:

tried to quote… gave up.  In response to Brie… I can clearly remember being accepted for a loan on the basis I took a payment protection plan.

with this car stuff, I understand it’s down to the individual to decide if they are okay with the ‘interest rate’ but it doesn’t sit right that the dealers were pocketing some of that cash and the finance companies were allowing them to falsify interest rates in order to take that additional cash.  

If they said right the finance company is charging 5% and we are adding 2.5% for ourselves, would that be acceptable? I don’t think so! 

You are 100% right BUT it didn't apply to everyone - hence the FCA consultation

Oh I know that, it was just in response to the comment that surely by having agreed to that interest rate there is no issue.  The issue is the deception about what the money you were repaying was and where it went. 

The issue here is the wording in use - in a sales pitch, the 2 parties might have verbally agreed say 5% subject to credit check based on an offer the firm was doing, and the credit check says "nope, deadbeat alert" and lender doesn't offer anything but 9.9% then that isn't artificial inflation of APR, it's perfectly fine regardless of whether the salesman got commission on it.

The issue here is (as an example) the salesman telling someone they'd do a credit check, getting the results saying the firm would offer 5% and then salesman saying that the finance co offered 9.9% and he haggled it down a bit so there is an offer of 7% - customer thinks they saved 2.9% APR, salesman inflated by 2% APR for more commission. 

chemteacher78

Hmmm, I'm a bit conflicted about this. I know that when I bought my last car there was a hike in interest between an initial discussion and what I ended up paying. I assumed it was because my credit file wasn't good enough. Looking back this seems unlikely as I had a good steady job, and no defaults or especially high credit usage.

I've put in a request for information with Vauxhall to find out if there was a DCA model in place at the time of purchasing. If there is then this definitely wasn't explained to me at the time, and I will put in a complaint. Not least because I would have been seen as a sitting duck in that type of scenario - nice 30-something lady teacher buying a new car with her elderly mum!