Car finance - hidden commission payments
Discussion
alscar said:
I also slightly struggle with the concept that the likes of VWFS did this but am clearly no expert.
One of the long standing 'features' of the motor trade is that it is very incestuous and the relationship between the manufacturers, dealers and finance companies is blurred.A company like Volkswagen AG has its own huge finance side, VWFS with billions of debts & loans made to buyers all around the world, collateralised against the value of the cars themselves. General Motors used to be described as a bank disguised as a car factory
Sticking with Volkswagen, VW franchisees are typically targeted on placing a huge amount of their financing business, new & used, with the captive finance provider VWFS as part of their main dealer franchise agreements. Some of those targets will include overall interest income, hence the previous temptation for the dealer to stick the average punter in a used car into a deal with as high a rate that the dealer thinks the punter will accept.
Volkswagen Group here in the UK typically has around 25% market share of all UK new car sales every year when all their brands (VW, Audi, Skoda, Porsche, and the rest) are taken into account, so VWFS clearly finance a huge amount of new cars every year, whether that be through personal lines such as HP, PCP or PCH or business leasing. VWFS also operate unit stocking finance arrangements to help the dealers have ample stock available at all times for sale.
Not only that, VWFS will also act the primary source of funding for used cars in VW dealerships up and down the country, so they are financing a huge amount of used VW Group and other brand cars as well. I think I read somewhere before that depending on the age/value of the car, 50-60% of used cars are bought on some form of dealer provided finance. The rest through cash savings and bank loans from the buyers.
Think about the lifespan of a typical car...VWFS finance it for the new buyer, finance it for the second buyer and possibly the third buyer also before it drops out of the VW dealer network or gets financed elsewhere.
That is three bites (at least) at the finance cherry on the same physical asset, likely offering the keenest rates and finance incentives for the new car to keep the factories churning out metal, then at each subsequent buyer, lending money again at higher rates.
Edited by phpe on Thursday 22 February 14:20
P-Jay said:
It may be because mortgage brokers are largely pointless unless you're completely clueless about finances. Their USP seems to be they know what banks like what, and what banks don't etc, but it's only really trial and error. There are Comparision sites for mortgages and AIPs take about 5 mins.
As a Mortgage Broker, this post made me laugh................ 
Sarnie said:
As a Mortgage Broker, this post made me laugh................
I’ve always wondered why you wouldn’t use a Broker for a mortgage so assume those that don’t are paradoxically perhaps more the clueless ones ?
Using a broker to do all the work and find deals that aren’t necessarily on any comparison sites without you paying a penny and then stepping away leaving you to deal with the chosen supplier has to me always seemed a pretty good idea.
phpe said:
One of the long standing 'features' of the motor trade is that it is very incestuous and the relationship between the manufacturers, dealers and finance companies is blurred.
A company like Volkswagen AG has its own huge finance side, VWFS with billions of debts & loans made to buyers all around the world, collateralised against the value of the cars themselves. General Motors used to be described as a bank disguised as a car factory
Sticking with Volkswagen, VW franchisees are typically targeted on placing a huge amount of their financing business, new & used, with the captive finance provider VWFS as part of their main dealer franchise agreements. Some of those targets will include overall interest income, hence the previous temptation for the dealer to stick the average punter in a used car into a deal with as high a rate that the dealer thinks the punter will accept.
Volkswagen Group here in the UK typically has around 25% market share of all UK new car sales every year when all their brands (VW, Audi, Skoda, Porsche, and the rest) are taken into account, so VWFS clearly finance a huge amount of new cars every year, whether that be through personal lines such as HP, PCP or PCH or business leasing. VWFS also operate unit stocking finance arrangements to help the dealers have ample stock available at all times for sale.
Not only that, VWFS will also act the primary source of funding for used cars in VW dealerships up and down the country, so they are financing a huge amount of used VW Group and other brand cars as well. I think I read somewhere before that depending on the age/value of the car, 50-60% of used cars are bought on some form of dealer provided finance. The rest through cash savings and bank loans from the buyers.
Think about the lifespan of a typical car...VWFS finance it for the new buyer, finance it for the second buyer and possibly the third buyer also before it drops out of the VW dealer network or gets financed elsewhere.
That is three bites (at least) at the finance cherry on the same physical asset, likely offering the keenest rates and finance incentives for the new car to keep the factories churning out metal, then at each subsequent buyer, lending money again at higher rates.
Interesting comments - I hasn’t really considered the three bites aspect before either. A company like Volkswagen AG has its own huge finance side, VWFS with billions of debts & loans made to buyers all around the world, collateralised against the value of the cars themselves. General Motors used to be described as a bank disguised as a car factory
Sticking with Volkswagen, VW franchisees are typically targeted on placing a huge amount of their financing business, new & used, with the captive finance provider VWFS as part of their main dealer franchise agreements. Some of those targets will include overall interest income, hence the previous temptation for the dealer to stick the average punter in a used car into a deal with as high a rate that the dealer thinks the punter will accept.
Volkswagen Group here in the UK typically has around 25% market share of all UK new car sales every year when all their brands (VW, Audi, Skoda, Porsche, and the rest) are taken into account, so VWFS clearly finance a huge amount of new cars every year, whether that be through personal lines such as HP, PCP or PCH or business leasing. VWFS also operate unit stocking finance arrangements to help the dealers have ample stock available at all times for sale.
Not only that, VWFS will also act the primary source of funding for used cars in VW dealerships up and down the country, so they are financing a huge amount of used VW Group and other brand cars as well. I think I read somewhere before that depending on the age/value of the car, 50-60% of used cars are bought on some form of dealer provided finance. The rest through cash savings and bank loans from the buyers.
Think about the lifespan of a typical car...VWFS finance it for the new buyer, finance it for the second buyer and possibly the third buyer also before it drops out of the VW dealer network or gets financed elsewhere.
That is three bites (at least) at the finance cherry on the same physical asset, likely offering the keenest rates and finance incentives for the new car to keep the factories churning out metal, then at each subsequent buyer, lending money again at higher rates.
Edited by phpe on Thursday 22 February 14:20
I had emailed them anyway although of the 3 providers I did , 5 of the loans were through them ( or Porsche previously ) and they are the only one not to initially acknowledge my email so I guess on pure numbers alone that could be why.
I’ll wait for the 28 days to go then maybe resend it to them or find another email address.
alscar said:
Interesting comments - I hasn’t really considered the three bites aspect before either.
I had emailed them anyway although of the 3 providers I did , 5 of the loans were through them ( or Porsche previously ) and they are the only one not to initially acknowledge my email so I guess on pure numbers alone that could be why.
I’ll wait for the 28 days to go then maybe resend it to them or find another email address.
Who did you email? I had emailed them anyway although of the 3 providers I did , 5 of the loans were through them ( or Porsche previously ) and they are the only one not to initially acknowledge my email so I guess on pure numbers alone that could be why.
I’ll wait for the 28 days to go then maybe resend it to them or find another email address.
I had an auto-response straight after sending my email which said:
"Dear Customer,
Thank you for your email regarding the commission arrangement and/or interest rate used by the selling retailer at the time you entered your credit agreement.
We can confirm that this has been received and we will endeavour to respond to you within 28 days.
Kind regards,
Commission Claims Team
Volkswagen Financial Services"
ashleyman said:
Who did you email?
I had an auto-response straight after sending my email which said:
"Dear Customer,
Thank you for your email regarding the commission arrangement and/or interest rate used by the selling retailer at the time you entered your credit agreement.
We can confirm that this has been received and we will endeavour to respond to you within 28 days.
Kind regards,
Commission Claims Team
Volkswagen Financial Services"
Customerresolutions@ vwfs.co.ukI had an auto-response straight after sending my email which said:
"Dear Customer,
Thank you for your email regarding the commission arrangement and/or interest rate used by the selling retailer at the time you entered your credit agreement.
We can confirm that this has been received and we will endeavour to respond to you within 28 days.
Kind regards,
Commission Claims Team
Volkswagen Financial Services"
As per the generated MSE given one.
I got the templates and simply cut and pasted to my own email account and added the pertinent details.
Was that the one you used ?
alscar said:
ashleyman said:
Who did you email?
I had an auto-response straight after sending my email which said:
"Dear Customer,
Thank you for your email regarding the commission arrangement and/or interest rate used by the selling retailer at the time you entered your credit agreement.
We can confirm that this has been received and we will endeavour to respond to you within 28 days.
Kind regards,
Commission Claims Team
Volkswagen Financial Services"
Customerresolutions@ vwfs.co.ukI had an auto-response straight after sending my email which said:
"Dear Customer,
Thank you for your email regarding the commission arrangement and/or interest rate used by the selling retailer at the time you entered your credit agreement.
We can confirm that this has been received and we will endeavour to respond to you within 28 days.
Kind regards,
Commission Claims Team
Volkswagen Financial Services"
As per the generated MSE given one.
I got the templates and simply cut and pasted to my own email account and added the pertinent details.
Was that the one you used ?
I've had responses from all but Santander acknowledging the complaints. VWFS is also my main one with 4 cars purchased from them in 6 years.
ashleyman said:
I think VWFS changed the email. I sent mine to commissionclaims@vwfs.co.uk as per MSE.
I've had responses from all but Santander acknowledging the complaints. VWFS is also my main one with 4 cars purchased from them in 6 years.
Interesting to read replies received already - mine are 2 x Toyota, 2 x Kia and 1 x Novuna. I don't expect much reply!I've had responses from all but Santander acknowledging the complaints. VWFS is also my main one with 4 cars purchased from them in 6 years.
Random_Person said:
Interesting to read replies received already - mine are 2 x Toyota, 2 x Kia and 1 x Novuna. I don't expect much reply!
I also had 2 with Novuna ( previously Hitachi ) and with their auto reply they said they would get back further to me within 3 days. This needless to say didn’t actually happen. Random_Person said:
How soon after emailing was that? I have not had even an acknowledgment from anyone other than Kia, they said they would come back to me in 28 days. The others have had my email from 8 days and I haven't even had an auto reply of receipt.
I emailed “ my “ 3 companies on the 7th Feb and got an immediate auto reply from both Novuna and Alphera but as I said previously Novuna’s said 3 days which obviously didn’t happen. After advice on here the revised email address for VWFS attracted an immediate auto reply.
Therefore only one real reply ( covering 2 agreements ) albeit very unhelpful.
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