car finance mis-selling for 0% finance from the dealership

for_sa123

hello, apologies if this a stupid question but does the finance mis-selling advertised by MSE recently apply to 0% finance from the car dealership? Thank you 

Brie

no it's for the ones where people had the interest adjusted by sales people on commission.  So someone might be offered 10% when the finance company would have been happy with 5% but the commission was higher on 10% so that's the deal that was made.

I don't know that anyone has ever had commission on a 0% deal

dunstonh

for_sa123 said:

hello, apologies if this a stupid question but does the finance mis-selling advertised by MSE recently apply to 0% finance from the car dealership? Thank you 

Think logically.

If you are on a nil interest loan, how much do you think the dealer has added to that loan interest rate to earn more commission?

DullGreyGuy

dunstonh said:

for_sa123 said:

hello, apologies if this a stupid question but does the finance mis-selling advertised by MSE recently apply to 0% finance from the car dealership? Thank you 

Think logically.

If you are on a nil interest loan, how much do you think the dealer has added to that loan interest rate to earn more commission?

Maybe the bank was willing to lend at -2% interest but the salesman increased it to 0% to get better commission

Hoenir

dunstonh said:

for_sa123 said:

hello, apologies if this a stupid question but does the finance mis-selling advertised by MSE recently apply to 0% finance from the car dealership? Thank you 

Think logically.

If you are on a nil interest loan, how much do you think the dealer has added to that loan interest rate to earn more commission?

Everything gets hidden in the gross margin in selling the vehicle. For the dealers there's the added incentive of kickbacks for hitting annual or promotional sales volume targets etc. 

DullGreyGuy

Hoenir said:

dunstonh said:

for_sa123 said:

hello, apologies if this a stupid question but does the finance mis-selling advertised by MSE recently apply to 0% finance from the car dealership? Thank you 

Think logically.

If you are on a nil interest loan, how much do you think the dealer has added to that loan interest rate to earn more commission?

Everything gets hidden in the gross margin in selling the vehicle. For the dealers there's the added incentive of kickbacks for hitting annual or promotional sales volume targets etc. 

But DCA is explicitly the dealer increasing the interest rate to get more commission which by definition would mean that the finance company would have had to be offering below 0% for the OP's argument to hold water. 

Hoenir

DullGreyGuy said:

Hoenir said:

dunstonh said:

for_sa123 said:

hello, apologies if this a stupid question but does the finance mis-selling advertised by MSE recently apply to 0% finance from the car dealership? Thank you 

Think logically.

If you are on a nil interest loan, how much do you think the dealer has added to that loan interest rate to earn more commission?

Everything gets hidden in the gross margin in selling the vehicle. For the dealers there's the added incentive of kickbacks for hitting annual or promotional sales volume targets etc. 

But DCA is explicitly the dealer increasing the interest rate to get more commission which by definition would mean that the finance company would have had to be offering below 0% for the OP's argument to hold water. 

On a broader level. The finance company , probably owned directly by the manufacturer themselves, isn't going to be working at a 0% rate. They've had to borrow the money to fund and structure the deal being marketed.  Motor dealers ceased offering a discount for cash thereby blocking the customer sourcing their own finance. All smoke and mirrors. 

BNPL . Finance your sofa over 4 years. All follow a similar business model. 

DullGreyGuy

Hoenir said:

DullGreyGuy said:

Hoenir said:

dunstonh said:

for_sa123 said:

hello, apologies if this a stupid question but does the finance mis-selling advertised by MSE recently apply to 0% finance from the car dealership? Thank you 

Think logically.

If you are on a nil interest loan, how much do you think the dealer has added to that loan interest rate to earn more commission?

Everything gets hidden in the gross margin in selling the vehicle. For the dealers there's the added incentive of kickbacks for hitting annual or promotional sales volume targets etc. 

But DCA is explicitly the dealer increasing the interest rate to get more commission which by definition would mean that the finance company would have had to be offering below 0% for the OP's argument to hold water. 

On a broader level. The finance company , probably owned directly by the manufacturer themselves, isn't going to be working at a 0% rate. They've had to borrow the money to fund and structure the deal being marketed.  Motor dealers ceased offering a discount for cash thereby blocking the customer sourcing their own finance. All smoke and mirrors. 

BNPL . Finance your sofa over 4 years. All follow a similar business model. 

Doesn't change the fact that DCA conflict of interest issue currently under investigation by the FCA is the sales person being told they can offer at one APR or can offer a higher APR in exchange for more commission. 

Much of the car finance, particularly for 2nd hand cars where DCA is suspected to be more of an issue, is not owned by the motor manufacturer. A Quick Look at the likes of RCI Financial Services on the FCA website you will see they are licensed to trade under the brands of Dacia, Nissan, Renault, Alpine to name some of the 24 names they can use. 

 From a consumer point of view 0% APR is legally what it says on the tin. What the deal is between the vehicle selling entity and financing entity is generally not of the concern of the consumer. I'm an insurance many rather than lending but inevitably similar ideas exist and how XXX Car Manufacture funds XXX Car Finance (both initially capital to lend and ongoing operational costs) when its not via the consumer charge interest rate will depend on where they want to crystallise profits, any arms length pricing requirements and legal jurisdictions etc.