UKC

Car Finance deals found to be illegal as the garage do not declare commission paid to the finance companies …

https://www.theguardian.com/business/2024/nov/10/i-relate-to-erin-brockovic...

Following the discussion here, https://www.ukclimbing.com/forums/off_belay/extended_car_warranty-776014?v=...

Suspect Mr Wintertree is going to be very happy at this outcome 😀

In reply to Wimlands:

I'm not sure I follow....it sounds like people are surprised that the dealer/broker gets a cut for finding the lender a customer? 

In reply to nikoid:

Exactly that, the dealer gets a commission for flogging a finance deal…which wasn’t being made explicitly clear to the customer.

In reply to Wimlands:

Much worse than that the commission was variable so if higher interest rate than normal charged garage got extra commission,it's not just about the fact that commission paid fact is garage could arrange a higher interest rate so client paying more to fund garages commission 

Absolutely despicable 

In reply to Wimlands:

I just had a look back over my rants from the last 8 years…

My evil twin (Dr Garth Wintertree, sports a goatee and black leather jacket) just. got a new business plan:

1. Start a company selling something, anything really, to the public. This is “Company A”
2. Start a finance company that finances the public buying Company A’s products on highly adverse terms.  This is Company B.  
3. Employ sales droids at company A who get minimum wage but get significant kickbacks from Company B for selling finance from company B against company A’s product.  I’d send them to in-person training events where any sort of recording is banned - an enforced ban - where they’re taught pressure selling tactics and where the scale of their kickback is spelt out.  The creators of South Park would blush at the language and ethos of these events.
4. I’d run company A as close to the wire as I could, until such point Martin Lewis drags the public to the point of recognising they’ve been taken as mugs by Company B, and forces the government to act.  Just before this happens I’d shift more of the take from Company A to Company B to make the latter look really attractive for acquisition and then I’d sell Company B to a big pension fund or similar.
5. I’d let company A go bust and walk away as the receivers sort it out. ​​​​​​
6. I’d start a firm of ambulance chasing lawyers to go after Company B - now divorced from me and owned by a deep pocketed pension fund - for mis-selling vis-a-vis the scandal Martin Lewis has brought to public light.

Edit: if I wanted to squeeze every last drop out, I’d start a clothing firm drop shipping cheap suits from Asia that the sales droids are required to buy and wear.

In reply to wintertree:

youtube.com/watch?v=4cl8xFXknmk&

In reply to wintertree:

Jeez, how did you find the time? x

In reply to Wimlands: may years ago I was signing up for my first montage with my then partner at  a branch the northern rock . the "advisor" was going through the paper rather quickly with a "ha ha....know body reads this", she was turning over pages a bit too quickly for my liking. At one point I stopped her and said " what happpened to page 12 ? you ve skipped from page 10 to page 12  ( or whatever)  could I see page 11 please ? " . the advisor became flustered as I turned the page back to the page that had the breakdown of who got what of out money and the several thousand pounds that various people had trousered and explained the hole in the maths that I was intending to ask about. My partner said afterwards that she had spotted the advisor pinch the pages together in a very practiced manner. I d completely forgotten this story until this thread. F£$ers.  

In reply to Wimlands:

I see this as another victory for idiots with buyer's remorse who don't read small print or aren't smart enough to see the bleeding obvious. 

They knew how much they'd pay to drive their posh cars which they otherwise couldn't afford. 

Tough luck.

In reply to gethin_allen:

Yep.  On the other hand the same applies to low cost new cars as well as so called posh ones. 
 

In reply to Wimlands:

Surely everybody knows the reason dealers are selling cars on finance is because it is more lucrative than selling them outright. They are obviously going to be reluctant to disclose the amount of commission they receive. I'm not sure I see this as a problem- the commission is bundled into the APR which the customer can decide whether they are willing to pay or not.

Personally I think it's a poor idea to take out any  loan to fund a depreciating asset, but the idea of driving around in a shiny new thing that you can't really afford is clearly too alluring for lots of people.

I agree buyer's remorse may be a factor in some of this.

In reply to nikoid:

Well, they didn't get much out of me when I bought my last car. 0% APR for 2 years and then paid the balance off with a lump sum and 0% credit card for a further 2/3 years.

In reply to gethin_allen:

Don't worry, I'm sure they will receive adequate compensation which will be partly funded by all of those who were smart enough to see the bleeding obvious ;(

In reply to LastBoyScout:

Excellent. These days 0% deals tend to be on cars they can't shift unfortunately.

In reply to LastBoyScout:

This has been the way to do it since they weren’t allowed to add a small % fee into credit card (about 5 years ago I think). Obviously requires  credit score that allows for a big interest free amount for 3-4 years, if you can get that then negotiate a price based on full finance, as soon as the finance paperwork comes through pay off in full with credit card. Only extra you pay is interest while waiting for the post so a few days. Prob done by email now so even less.
I made sure to get written confirmation of accepting credit card payment in full beforehand.  

In reply to SATTY:

^This^.

The dealer taking a commission was common practice and known by all but the most clueless consumer. What was not shared or common knowledge was that the commission rates increased significantly if they could tuck you up in some ludicrous APR. Sadly too many people lack the basic maths skills to see beyond their monthly payment. I remember some dealers advertising the rates for weekly payments as it reduced the prices by more than 25% and caught the attention of those who really were at risks of the sharks. There were lots of examples of people who could not get an overdraft or bank loan but could walk out of a showroom with a £20k car. Nasty business.

In reply to nikoid:

While looking online, my wife found an advert for the dealers offering 0% finance on used models and, on presenting this advert, the salesperson agreed it on the car I was buying.

Later found out that he was new to the business and that deal only applied to certain group stock of the model with a smaller engine size (ex-pool cars, or something), but the sales director honoured it, partly due to a couple of errors in the advert (mileage significantly higher than quoted and something else, can't remember what).

In reply to timjones:

Absolutely. I look forward to funding their stupidity.

In reply to gethin_allen:

Appreciate it.

Between VW and Nissan I'm potentially due 13k  which I will use as a deposit to finance another preposterous car!

In reply to gethin_allen:

Got to call you out on this one. There isn't enough time in your life to read all the small print. Every single time you buy something online, there are piles and piles of terms and conditions that you accept by simply clicking the tick box. To read and properly assimilate that stuff could easily take more than an hour. It's not reasonable to expect a customer to spend an hour or two carefully reading T&Cs when they just wanted to buy a lightbulb to replace the one that blew in the hallway.

Sure, you're going to spend a bit more time if you're buying a £40k car but it still isn't and shouldn't be considered reasonable to hide something unpleasant in the small print without it also being in large letters on the front page of the agreement.

despite the above, I would agree with the general view that if the apr, price with finance, cash price and price difference are all clearly shown then it really is a person's own responsibility to check whether that arrangement works for them and is something they want to go for. Obv there are a small number of exceptions, like if the buyer has brain problems and lacks the mental capacity to understand the agreement, the seller should not go through with the agreement, irrespective of what the buyer might say.

In reply to nikoid:

I've never bought a car that way (I always use unsecured personal loans because the rate is always way, way better than anything any dealer will find, they quickly shut up when asked to match it, plus no deposit is needed), but I have had credit arranged for a few things and it's always been stated explicitly both that commission was paid and how much it was.

In reply to wintertree:

I don't think you invented that, it's exactly what car dealerships have done for years (possibly aside from the last two steps).  In many ways the finance is the real product, that you get a mode of transport out of it is just incidental.  A bit like the way Dixons Group is in the business of selling extended warranties - the electronics are a very low-margin inducement to take one out, essentially.

I have wondered if it's one reason why cash prices of new cars are so utterly ludicrous - I mean, £40K for something like a Vauxhall Astra is ridiculous, by inflation alone from ten years ago it should be less than half that.  Fortunately used buyers get to have the previous owner fund that nonsense for us.

In reply to henwardian:

I'm currently working (under contract) for one of the major banks, and even us IT bods have to do the full raft of quarterly mandatory training - and one very key part of that is how they can get in a lot of bother if they effectively mis-sell something to someone who didn't have the capacity to understand what they were buying.  So the reputable financiers do think about this - the less reputable ones perhaps less so.

In reply to Neil Williams:

When I bought my last (new) vehicle, I asked for a quote from every dealership in the UK. Then I took the cheapest one and challenged them to beat it, then took a chunk off the cheapest of the second rounds and challenged them to beat that. It was quite an effective way of getting a vehicle a lot cheaper than the list price and when it comes to a one-off purchase for that amount, It's well worth playing the game to make sure you don't pay a ludicrous price for a new car/van.

In reply to henwardian:

That works if you've got a lot of time (e.g. you're retired) and like making a lot of phone calls, or it's a rare car that's only sold at a few dealerships.

Though you can take that approach with less of a time commitment via services like Carwow and Drivethedeal, I suppose.  (And I do quite like the car reviews done by the Brummie guy to advertise the former!)

In reply to henwardian:

For a lightbulb I agree with you, although recent cases in the US over clickthroughs with Disney and Uber waiving rights to legal action - preventing cases of unrelated wrongful death - in return for an Uber eats or a Disney+ subscription, your POV is challengeable over there.  What comes to America then gets lobbied for over here within a decade.  Looping back to the thread, the shift to adverse car finance happened a decade sooner over there…

I would say the size of the contract is not unreasonable to read given the cost of the transaction.  That being said…

> and shouldn't be considered reasonable to hide something unpleasant in the small print without it also being in large letters on the front page of the agreement.

I agree, and that’s the essence of the judgement as I grok it.  

The small print should only be giving the detailed descriptions behind qualifiers etc of the bullet point list on a headline terms sheet.   Finance or not, there should be a 1-page terms sheet. Kickbacks aren’t legal clauses so the headline terms sheet should include all the clauses (to be detailed in small print) and itemise all conflicts of interest (including all kickbacks, to be detailed in small print).

I watch with interest to see how the finance industry, er sorry car sales industry, responds to this…

For any finance agreement I’d like to see a legally required pie chart on the terms sheet showing the total money to be paid, how much goes to the thing being bought, how much goes to the finance firm as interest and how much goes to the finance firm and to any broker as fees.  For many current agreements from the dealer pipeline it’d as attractive as the tarred up lungs on cigarette packages.

In reply to Neil Williams:

Exactly, some of us are busy!

As I'm self employed I can apparently deduct 100% of the cost of a pure electric vehicle from this year's tax bill if I buy it by hire purchase.

Even with that incentive I'm still not sure that my current bangernomics isn't much cheaper

In reply to Neil Williams:

If it's not rare, maybe you don't need to canvas the whole nation, 20 dealerships or so should be sufficient. It does take time but you're talking about maybe 7 or 8 hours spread out over a week or two and if that saves you £5k to £10k then it's guaranteed to be worth your while.

Having time is about making time. Everyone has the ability to make a few hours of free time if they are motivated enough to do so. Everyone. (well, ok, if you are like an SAS soldier in enemy territory on a deep cover mission or an astronaut on the space station, you might not but even those people can just put off buying the car till they get home!).

In reply to henwardian:

Yet you have also directly argued - on this thread - against people having the time to read the small print on car purchases.

https://www.ukclimbing.com/forums/off_belay/car_finance-776272?v=1#x9977489

You are directly and blatantly contradicting yourself.

In reply to wintertree:

When I went river rafting in Canada 30 years ago (about), you had to sign a contract that said you couldn't take legal action even if you were injured as a result of gross negligence on behalf of the guide. The opinion at the time was that you signed the thing anyway but the reality is that the contract wouldn't stand up in court. There are certain things you can't sign away, even if you wanted to. If the lightbulb company got you to tick a box that had T&Cs saying you had no comeback if the bulb was defective and exploded in your face giving you life changing facial injuries, it would never hold up in any court, because you can't force terms like that on people, _even_ if it is in 72 point type on page 1 of the agreement.

While this would be nice, I don't feel it is a necessity. The consumer needs to know how much they will repay over what period, what monthly amount and what APR they are effectively paying, that should be enough for them to judge if it's a transaction they want to go ahead with. I'm not sure I see why it really matters where the different parts of the pie chart go. At a push I could see that it would be good to see what your car dealership/dealer makes on the transaction as it might tip you off as to why the salesman is pushing a particular car. But even there, I think if you go into the dealership and just sort of give a vague idea of what you want and let the salesperson decide the right car for you, you really are being a fool. Surely you do your own research, of which the opinion of the salesman is only one tiny piece and then make a decision based on what you find.

In reply to henwardian:

As I said, I was talking about the USA, which is a decade or two ahead of where we tend to go.

Someone signed away their rights to legal action against Uber in an Uber Food click-subscription (*) and the contract stood up in court when someone whose partner was killed by an unrelated Uber driver.  (With legal action against Uber being the route in the US to an insurance claim if I understand it right).

https://www.ukclimbing.com/forums/politics/uber_succeeds_where_disney_capit...

The evidenced examples from Uber and Disney in the US is that someone - when buying a bulb - can sign away their right to legal action against the bulb manufacture to the point that some unrelated action of the manufacturer kills the bulb buyer and legal recourse is gone against that negligent action.

I’m not speculating, the link above is legal fact in the USA.

Currently, in the UK, we can’t sign away certain rights like those involved here.

As I said, this is now reality in the USA.  I also said my opinion is that reality here tends to follow - eventually - reality there, with adverse car finance being a pertinent option.  Laws can change and it’s clear as mud that the big corps are looking to overreach on enforced arbitration clauses.

Earlier you said people don’t have the time to read a contract they’re signing.  You would appear to be directly contradicting yourself.

(*) I’m over simplifying the case here.  The reality is worse with a minor having done the online EULA click-through.

In reply to wintertree:

I have read the relevant article and think this interpretation is inaccurate, overly broad and incorrectly far reaching.

reading obligatory and unmodifiable T&Cs that are delivered as part of the formality of concluding a transaction is completely different from choosing which car or lightbulb to actually buy. The product is the thing you have researched and chosen. The T&Cs are just a timewasting part of the purchase that you have to click through.

In reply to Neil Williams:

It is interesting to compare attitudes expressed in this thread with those voiced in the Sportivo boot review.

Current prices for cars are shockingly too high, yet justifiable for boots despite showing similar increases above inflation.

But, but, it's climbing, that's different...

In reply to Ennerdaleblonde:

Probably more that climbing shoes going from £100 to £200 (random figures, I've not bought any in a while) has far less financial impact than an average new car (e.g. Astra/Focus) going from £20K to £40K.  One of them hits you a bit in one month, the other hits you a lot every month.