Car finance commission rules have changed - did you know?
Poll: Car finance commission rules have changed - did you know?
Total Members Polled: 77
Discussion
I didn't know they'd changed today, but was told by the dealer a couple of weeks ago something about it.
I was hoping for a bit of negotiation based on him getting a nice finance commission (and then just settle the finance as soon as the car was delivered), but he told me they didn't do that anymore. So the price we negotiated would be the same however I paid.
He tried to sell this as a 'good thing' in that they had to offer the same price whether bought by cash/card/finance...but limited cash payments to £6k, debit card payments to £10k and had banned credit card purchases...so you're almost forced into a finance agreement for anything larger.
Plus the fact that they claimed there was a franchise-wide, set APR and they wouldn't budge on it, when in fact their own marque's financial services provider was offering an APR of almost half, means they'll just find other ways to make a bit extra.
None of this stopped them offering about £2000 worth of tyre (£300), bodywork & paint protection (£800), car park/vandal damage repair (£500) & other insurance products though.
I was hoping for a bit of negotiation based on him getting a nice finance commission (and then just settle the finance as soon as the car was delivered), but he told me they didn't do that anymore. So the price we negotiated would be the same however I paid.
He tried to sell this as a 'good thing' in that they had to offer the same price whether bought by cash/card/finance...but limited cash payments to £6k, debit card payments to £10k and had banned credit card purchases...so you're almost forced into a finance agreement for anything larger.
Plus the fact that they claimed there was a franchise-wide, set APR and they wouldn't budge on it, when in fact their own marque's financial services provider was offering an APR of almost half, means they'll just find other ways to make a bit extra.
None of this stopped them offering about £2000 worth of tyre (£300), bodywork & paint protection (£800), car park/vandal damage repair (£500) & other insurance products though.
Edited by mmm-five on Thursday 28th January 10:05
mmm-five said:
He tried to sell this as a 'good thing' in that they had to offer the same price whether bought by cash/card/finance...but limited cash payments to £6k, debit card payments to £10k and had banned credit card purchases...so you're almost forced into a finance agreement for anything larger.
Online bank transfer?Edited by mmm-five on Thursday 28th January 10:05
I've used the same finance company for the last 30 years.
They give me a good APR and in most cases all is well.
However, I occasionally come across issues where a dealership tries to insist that I use one of their 'approved' companies.
The last one, Land Rover in S-O-T insisted that they had a "duty of care" to protect me from dodgy finance companies.
I did point out that the previous two cars I had bought from them had used my preferred company.
He didn't like it when I called BS and mentioned commission.
They point blank refused to sell me a car and so I ended up buying a very nice Disco First Edition from a dealer in Derby.
Crazy.
They give me a good APR and in most cases all is well.
However, I occasionally come across issues where a dealership tries to insist that I use one of their 'approved' companies.
The last one, Land Rover in S-O-T insisted that they had a "duty of care" to protect me from dodgy finance companies.
I did point out that the previous two cars I had bought from them had used my preferred company.
He didn't like it when I called BS and mentioned commission.
They point blank refused to sell me a car and so I ended up buying a very nice Disco First Edition from a dealer in Derby.
Crazy.
This weeks autocar covers it well.
The ban covers their commisson on finance, and they must declare what comission they have. The former means they are likely to just offer the one apr rate, which could be much higher then a loan from a bank.
The advice given is to shop around for finance. Or, in pistonheads speak, buy it with cash outright. Ueed tenners only. Non consecutive numbers
The ban covers their commisson on finance, and they must declare what comission they have. The former means they are likely to just offer the one apr rate, which could be much higher then a loan from a bank.
The advice given is to shop around for finance. Or, in pistonheads speak, buy it with cash outright. Ueed tenners only. Non consecutive numbers
mmm-five said:
Probably, don't remember him specifically mentioning that option - although did mention a limit for bank drafts - maybe bank transfer is such a standard method now that he didn't think it needed mentioning?
It will be for large payment as it dosnt cost them moneyCards and cheques all cost money to process
I sell cars, it is a much fairer principle.
Previously, customer X and customer Y look at the same car on a PCP contract. Customer X could have been offered 6% APR, customer Y could have been offered 11% APR depending on who they spoke to. Never thought that was a particularly fair way of doing things.
Now, both customer X and Y will be offered the same finance rate, and therefore the same deal. It does make negotiation a little harder as you aren't able to 'drop the rate' to make the deal better, but it makes the process easier and much fairer and cuts out a lot of the toing and froing.
Previously, customer X and customer Y look at the same car on a PCP contract. Customer X could have been offered 6% APR, customer Y could have been offered 11% APR depending on who they spoke to. Never thought that was a particularly fair way of doing things.
Now, both customer X and Y will be offered the same finance rate, and therefore the same deal. It does make negotiation a little harder as you aren't able to 'drop the rate' to make the deal better, but it makes the process easier and much fairer and cuts out a lot of the toing and froing.
Most dealer groups would have implemented standard rates across the board a couple of years ago in anticipation of this ruling, we certainly did.
We also have the same amount of commission kick back whether £4k is financed or £20k, PCP and HP pay the same in commission too so there is less likely to push someone one way as opposed to the other.
TBH it makes it easier for the dealer and salesman as well as the customer as everyone knows where they stand.
We also have the same amount of commission kick back whether £4k is financed or £20k, PCP and HP pay the same in commission too so there is less likely to push someone one way as opposed to the other.
TBH it makes it easier for the dealer and salesman as well as the customer as everyone knows where they stand.
williamp said:
This weeks autocar covers it well.
The ban covers their commisson on finance, and they must declare what comission they have. The former means they are likely to just offer the one apr rate, which could be much higher then a loan from a bank.
The advice given is to shop around for finance. Or, in pistonheads speak, buy it with cash outright. Ueed tenners only. Non consecutive numbers
I may be wrong but I don't think we have to declare any commisson amount unless specifically asked and I think this is only limited to finance for a company or business as oposed to a private individual. The ban covers their commisson on finance, and they must declare what comission they have. The former means they are likely to just offer the one apr rate, which could be much higher then a loan from a bank.
The advice given is to shop around for finance. Or, in pistonheads speak, buy it with cash outright. Ueed tenners only. Non consecutive numbers
Question for the dealers - if the rate of finance offered to all has to be the same, is this across a dealer group, an individual dealership, a brand, or a model of car?
I assume for example a huge chain don't have to charge the same interest rate to every buyer on every car? e.g. certain new cars may attract lower rate finance deals as they always have.
If dealers can't tweak finance figures to provide a better deal, are they likely to be more open to negotiating on part-ex values or windscreen prices to do a deal, or have we now reached the point of no negotiation in a dealership - that's your deal, take it or leave it?
I'd be quite happy with that TBH, dealership offers the best deal they can do, if the customer wants it its good for all, if not all parties can move on.
I assume for example a huge chain don't have to charge the same interest rate to every buyer on every car? e.g. certain new cars may attract lower rate finance deals as they always have.
If dealers can't tweak finance figures to provide a better deal, are they likely to be more open to negotiating on part-ex values or windscreen prices to do a deal, or have we now reached the point of no negotiation in a dealership - that's your deal, take it or leave it?
I'd be quite happy with that TBH, dealership offers the best deal they can do, if the customer wants it its good for all, if not all parties can move on.
yellowbentines said:
Question for the dealers - if the rate of finance offered to all has to be the same, is this across a dealer group, an individual dealership, a brand, or a model of car?
Lots of variation on this - everyone is tackling it differently. Broadly speaking, rates offered will vary from dealer to dealer.It is more transparent, but it also means the end of any negotiation.
Ultimately a lot of dealers make nothing on the car itself - the money is in the finance. Hence why if you walk into a dealer saying you want to buy a car outright, you won't be sat down in some kind of VIP area, you are an inconvenience and the most successful sales execs would rather palm you off to a newbie instead.
APR is ultimately down to your own credit history anyway.
Ultimately a lot of dealers make nothing on the car itself - the money is in the finance. Hence why if you walk into a dealer saying you want to buy a car outright, you won't be sat down in some kind of VIP area, you are an inconvenience and the most successful sales execs would rather palm you off to a newbie instead.
APR is ultimately down to your own credit history anyway.
thelostboy said:
APR is ultimately down to your own credit history anyway.
I disagree with this, it perhaps should be, but I've known people with perfect credit pay a higher APR because they are financially unaware and just looked at the monthly payments and signed up.This move I guess is designed to protect those people to a degree, as they can't be exploited for being an easy target.
The flip side is that those who are financially savvy can't go in hard and demand a better rate than advertised.
Seb27 said:
I sell cars, it is a much fairer principle.
Previously, customer X and customer Y look at the same car on a PCP contract. Customer X could have been offered 6% APR, customer Y could have been offered 11% APR depending on who they spoke to. Never thought that was a particularly fair way of doing things.
Now, both customer X and Y will be offered the same finance rate, and therefore the same deal. It does make negotiation a little harder as you aren't able to 'drop the rate' to make the deal better, but it makes the process easier and much fairer and cuts out a lot of the toing and froing.
How does this work with people and dreadful credit ratings? I worked for a car supermarket a few years ago, we had a load of finance companies but some would only offer credit at a huge apr to people with a bad rating compared to good rating.Previously, customer X and customer Y look at the same car on a PCP contract. Customer X could have been offered 6% APR, customer Y could have been offered 11% APR depending on who they spoke to. Never thought that was a particularly fair way of doing things.
Now, both customer X and Y will be offered the same finance rate, and therefore the same deal. It does make negotiation a little harder as you aren't able to 'drop the rate' to make the deal better, but it makes the process easier and much fairer and cuts out a lot of the toing and froing.
Will alot of bad credit rating people have to avoid main dealers?
williamp said:
Dealers can offer different rates, its just that they arent. They can vary it according to your credit history if they wish to. Apparently a company called Motonovo can offer this service to dealers.
Are those that dont working in the best interest of their customers??
Essentially, dealers can offer prime customers one rate and non-prime another. So, one rate for those with a good credit rating and another for those who don't. There are also some sophisticated decision engines being used by finance companies to hunt for the best rates for dealer customers which takes the human decisioning out of it.Are those that dont working in the best interest of their customers??
I assume that prime and subprime will still have differing rates dependent on credit worthiness, my understanding is a dealer may well have 8.9% in their system, in the past we could up the rate just because we could and we could get away with it, depending on the customer and what they were looking to achieve on a monthly basis, I guess this ruling means that this is no longer possible.
Haven't done the rate adjustment thing for many years now.
Haven't done the rate adjustment thing for many years now.
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