Inflated car loan rates
Discussion
I came across this story about LBG (and others) and realised that I bought an M3 on one of these deals - was around 9.9/10%. Does one wait for the class action to go through or can I contact the solicitors handling the class action.
"The deals, which allegedly saw car retailers and credit brokers get higher commission from the lenders after selling the finance at inflated interest rates, were struck between 2015 and 2021, according to the Daily Telegraph, which is owned by Lloyds Banking Group."
A link to the story - https://cardealermagazine.co.uk/publish/car-financ...
Maybe I should amend the title to 'Alleged ... ' ala Private Eye?
"The deals, which allegedly saw car retailers and credit brokers get higher commission from the lenders after selling the finance at inflated interest rates, were struck between 2015 and 2021, according to the Daily Telegraph, which is owned by Lloyds Banking Group."
A link to the story - https://cardealermagazine.co.uk/publish/car-financ...
Maybe I should amend the title to 'Alleged ... ' ala Private Eye?
I've read the link and still c9nfused. Are they saying people were charged higher interest rates than they were advised at the point of taking out finance? Surely not?
If people were taking out loans at 10% APR and knew that at the point of signing up I don't see where there's a case?
I've always shopped around for loans f9r cars and don't think I've ever used a dealers finance as its never been competitive in my experience.
If people were taking out loans at 10% APR and knew that at the point of signing up I don't see where there's a case?
I've always shopped around for loans f9r cars and don't think I've ever used a dealers finance as its never been competitive in my experience.
Jamescrs said:
I've read the link and still c9nfused. Are they saying people were charged higher interest rates than they were advised at the point of taking out finance? Surely not?
If people were taking out loans at 10% APR and knew that at the point of signing up I don't see where there's a case?
I've always shopped around for loans f9r cars and don't think I've ever used a dealers finance as its never been competitive in my experience.
Same here, I'm not sure if it's people have been charged higher rates than what they signed up for, or if it's "bahh dealers are bad, how dare they have these high rates!" If people were taking out loans at 10% APR and knew that at the point of signing up I don't see where there's a case?
I've always shopped around for loans f9r cars and don't think I've ever used a dealers finance as its never been competitive in my experience.
My eldest, who has never been great with money, a few years back signed up for a car with a prime lender, due to her circumstances, a few years down the line, her partner had a big bonus and they decided to clear the car finance, a year to run she obtained a settlement figure, it was just less than a monthly payment, however as far as she was concerned she still had just over a year left.
It transpired there had been a procedural or document error on behalf of the finance company, meaning they voluntarily (I guess before being investigated and likely my daughter wasn't the only one) refunded her all of the interest.
Sounds like customers obsessed with 'the monthlies' who didn't bother to read their finance agreements before signing them.
And now they're probably failing to realise that they might have been offered inflated part-exchange values and / or generous discounts on their new car in order to help achieve those required monthly payments.
Some people really shouldn't be let anywhere near a contract, especially if they can't accept responsibility for their actions later on.
Of course, if the APR shown on the finance docs didn't bear any relation to the APR actually being charged, then that's a different matter entirely.
And now they're probably failing to realise that they might have been offered inflated part-exchange values and / or generous discounts on their new car in order to help achieve those required monthly payments.
Some people really shouldn't be let anywhere near a contract, especially if they can't accept responsibility for their actions later on.
Of course, if the APR shown on the finance docs didn't bear any relation to the APR actually being charged, then that's a different matter entirely.
The issue here is that the lender would supply a price/yield/rate and the dealer would load the rate to earn un documented/un disclosed commissions, and have this hidden in the cost of funds to the end user.
You are dealing within highly regulated environment where you just can't do this anymore.
ie, the last asset finance business I was involved in setting up (9 years ago), cost of funds for a basic brokered deal to a black horse or lombard, I could get the funds from the at 1.2/1.3% pa, we would mark up to 4/5 pa% to achieve the yields we needed over the term, however you could (and in some cases we did) have punted that at 7/8% pa.. (KIV we also carried the risk on amortising/depreciating assets so not profiteering ok! i borrow 100k from Lombard to lend to you, you write the car off uninsured my loss etc.)
When the regulations hit, I set up an own book and took the funds from investors so we could carry the profits, however we were targeting 'prime' commercial clients, so the majority was still with the prime lenders as such, tarnished silver my old business partner referred to it).
On the documents if the dealer commission stated (say) £500, ok..
But if it was £500... then (completely hidden) + 3/6% pa (on your 40k/60k/300k pcp), + 2% at end of agreement, that you are paying for completely not on the loan/finance agreement than thats not fair hence the 'refunds'.
You are dealing within highly regulated environment where you just can't do this anymore.
ie, the last asset finance business I was involved in setting up (9 years ago), cost of funds for a basic brokered deal to a black horse or lombard, I could get the funds from the at 1.2/1.3% pa, we would mark up to 4/5 pa% to achieve the yields we needed over the term, however you could (and in some cases we did) have punted that at 7/8% pa.. (KIV we also carried the risk on amortising/depreciating assets so not profiteering ok! i borrow 100k from Lombard to lend to you, you write the car off uninsured my loss etc.)
When the regulations hit, I set up an own book and took the funds from investors so we could carry the profits, however we were targeting 'prime' commercial clients, so the majority was still with the prime lenders as such, tarnished silver my old business partner referred to it).
On the documents if the dealer commission stated (say) £500, ok..
But if it was £500... then (completely hidden) + 3/6% pa (on your 40k/60k/300k pcp), + 2% at end of agreement, that you are paying for completely not on the loan/finance agreement than thats not fair hence the 'refunds'.
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