Secret Commissions and Over Charging
A personal contract purchase agreement, also known as “PCP”, is a car finance package intended to give consumers an opportunity to buy a better car for their monthly budget, while also providing the option to purchase the car at the end of the agreement through a “balloon payment.”
However, if you have entered into such an agreement with your car dealership, you may well have been significantly overcharged through secret commissions and high interest levels.
In March 2019, the Financial Conduct Authority reported that overcharging to UK car finance customers could be in the region of £300 million a year. It estimated that on a typical 4 year motor finance agreement, customers were paying up to £1,100 more for every £10,000 borrowed in secret commissions and heightened interest rates – an increase of 50%.
Affordability Assessments
The FCA was also not satisfied that car finance companies were properly assessing customers’ ability to afford the payments they were getting themselves into, with car dealerships (who acted as the car finance company’s broker for these purposes) focusing more on credit risk to the finance company.
Most people were never told that they could shop elsewhere for their credit to finance the purchase of their car and instead were led to believe that they could only drive away the car they wanted by entering into the finance agreement offered by the car dealership.
Commission Structures Designed to Overcharge You
Perhaps the biggest shock from the FCA’s report was the revelation that sales staff could not only set the interest rates the finance company was going to charge customers, but actually got a bigger commission or bonus the higher the interest rate they could get away with charging.
- No commissions disclosed
- Inadequate affordability assessments
- No range of finance options given
If you have entered into a PCP Agreement with a car dealership to purchase a car, you may be entitled to claim back secret commissions and over-charged interest on your loan. At the moment, the car finance industry is standing firm and refusing to admit any wrongdoing but JLG can help you get the justice you deserve.
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