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Staggering £300m Lost Every Year Due to Car Dealership Commission Driving Hard Bargains

Finance experts TotallyMoney reveal how much customers could save by avoiding finance options at car dealerships amid the Financial Conduct Authority’s (FCA) crackdown on unfair commission agreements.

  • A staggering £300m is being lost every year across the UK due to commission-focused dealerships, FCA reports*
  • The majority of new car registrations (9 in 10) were financed through dealerships in 2018†
  • Nearly three quarters of people (68%) have accepted the first car finance deal offered to them at a dealership‡
  • Customers could pay an unnecessary £1,100 extra in interest over a four-year loan*

Figures from 2018-9 report the majority of people buying a car (91%) were persuaded by car dealerships into taking out credit to help them with their purchase.†

Research by the FCA found that buyers are typically sold a finance product based on a broker’s commission, rather than the customer’s creditworthiness. Dealerships receive their commission from lenders based on the interest rate a customer gets, therefore incentivising the broker to increase the rate to earn more.

This often results in customers getting a car finance deal that costs them more than they need to pay.

As a result, the FCA estimates that a customer could end up paying an extra £1,100 in interest on a four-year £10,000 finance agreement.

In light of their findings, the FCA has now put the brakes on these practices in the car finance market. Commencing in January 2021, discretionary commission models that are not in the customer’s best interests are banned.

A steer in the right direction

The finance experts are shifting gears on the traditional, commission-based model by allowing TotallyMoney customers to check their eligibility for more affordable finance options before they head to the dealership, and all results are based on what’s best for the customer, not best for the dealership.

Customers can see a larger and more varied range of products than they would find at a dealership.

At a time when many people’s financial situation has changed due to coronavirus, finding the cheapest option, with the easiest payment plan, can make a considerable difference.

Alastair Douglas, CEO of finance experts TotallyMoney, comments:

“A car is often a lifelong necessity and a large portion of someone’s monthly expenses. This is particularly important at the moment, as more people may be keen to avoid public transport amid the coronavirus crisis.

“But, car dealerships can sometimes seem unfair. The industry currently lacks competition, and at the point of sale the main focus is on the broker’s commission, rather than what is right for the customer.

“We wanted to change this. Our new car finance eligibility platform brings in creditworthiness as a top priority, so customers can get finance options that are right for their situation. We work closely with our lenders, so that customers see market-leading products that will work for them.

“At TotallyMoney, we’re on a mission to improve the UK’s credit score and help our customers move on up to a better financial future. Checking your free credit report to better understand your financial situation could help you improve your credit rating, and help you find the best deals for your next car.”

*Based on FCA analysis across 60% of the motor finance sector March 2019 - https://www.fca.org.uk/publication/multi-firm-reviews/our-work-on-motor-finance-final-findings.pdf

https://www.fla.org.uk//motor-finance/

https://blog.zopa.com/2019/10/09/car-finance-drives-consumers-round-the-bend-9-in-10-uk-adults-confused-by-car-finance-options/

For more information, please contact the press team

About TotallyMoney

With a focus on the one in three UK adults financially under-served by the financial services industry, TotallyMoney is the credit app on a mission to help everyone move their finances forward.

TotallyMoney believes people’s financial data should work for them, and not against them and with more than four million customers, they provide the UK’s only free, live credit score and report.

Its service helps customers understand their financial position and provides personalised recommendations so they can start creating financial momentum. TotallyMoney also works closely with leading lenders, to ensure eligible customers are matched with the right products, underpinned by its robust data, product and tech capabilities.

TotallyMoney is regulated by the Financial Conduct Authority (FCA).

We're on a mission to help everyone move their finances forward and gain financial momentum.


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TotallyMoney is owned and operated by TotallyMoney Limited which is registered in England and Wales (Company Registration Number 06205695). TotallyMoney Limited is an Appointed Representative of TM Connect Limited, which is registered in England and Wales (Company Registration Number 06967012) and authorised and regulated by the Financial Conduct Authority in respect of consumer credit related activities (FCA FRN: 511936). Trading Address and Registered Office: Chapter House, 16 Brunswick Place, London N1 6DZ. Credit is available, subject to status, only to UK residents aged 18 or over.

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