Could be good news for some. PCP refunds?!
Discussion
Oh FFS, another cash grab.
"Show us on the doll precisely where the car salesman stroked your ego".
It is incredibly rare that buying a new car, through any means, is a good financial decision. However, people buy them because they want them. I see the appeal of a new car, I'm just too poor/tight to buy the sorts of car I like brand new.
When I was buying my first car after uni I test drove cars under PCP deals, and every salesman sold PCP on some variation of "surfing the new car wave", i.e. I would never have a car more than 3 years old. That spiel put me off the idea as I didn't know what I wanted to be doing in 3 years. When you are buying in to an approach that essentially means you are financing forever then it's clearly a bad idea to anyone with sufficient brainpower to sign the paperwork.
"Show us on the doll precisely where the car salesman stroked your ego".
It is incredibly rare that buying a new car, through any means, is a good financial decision. However, people buy them because they want them. I see the appeal of a new car, I'm just too poor/tight to buy the sorts of car I like brand new.When I was buying my first car after uni I test drove cars under PCP deals, and every salesman sold PCP on some variation of "surfing the new car wave", i.e. I would never have a car more than 3 years old. That spiel put me off the idea as I didn't know what I wanted to be doing in 3 years. When you are buying in to an approach that essentially means you are financing forever then it's clearly a bad idea to anyone with sufficient brainpower to sign the paperwork.
donkmeister said:
Oh FFS, another cash grab.
"Show us on the doll precisely where the car salesman stroked your ego". It is incredibly rare that buying a new car, through any means, is a good financial decision. However, people buy them because they want them. I see the appeal of a new car, I'm just too poor/tight to buy the sorts of car I like brand new.
When I was buying my first car after uni I test drove cars under PCP deals, and every salesman sold PCP on some variation of "surfing the new car wave", i.e. I would never have a car more than 3 years old. That spiel put me off the idea as I didn't know what I wanted to be doing in 3 years. When you are buying in to an approach that essentially means you are financing forever then it's clearly a bad idea to anyone with sufficient brainpower to sign the paperwork.
"No such thing as mis-selling, only mis-buying""Show us on the doll precisely where the car salesman stroked your ego".
It is incredibly rare that buying a new car, through any means, is a good financial decision. However, people buy them because they want them. I see the appeal of a new car, I'm just too poor/tight to buy the sorts of car I like brand new.When I was buying my first car after uni I test drove cars under PCP deals, and every salesman sold PCP on some variation of "surfing the new car wave", i.e. I would never have a car more than 3 years old. That spiel put me off the idea as I didn't know what I wanted to be doing in 3 years. When you are buying in to an approach that essentially means you are financing forever then it's clearly a bad idea to anyone with sufficient brainpower to sign the paperwork.
Youforreal. said:
Did you buy a car?, did it do exactly as expected? , did you know exactly how much you’d be paying every month?
If yes you are entitled to money back.
If yes you are entitled to money back.
It does sound exactly like this.VW and BMW offered the best deals at the peak of PCP. I wonder if it means they have to pay a heavier price for this.
I do remember back in the day when we had finance penetration targets set by the manufacturer, based solely on PCP penetration, it was massively incentivised, I should imagine it was the same for all marques, I assume it is this the FCA will be looking into. I can't see how "mis-selling" can be proven.
Can't remember when the targeting stopped, it was many, many years ago.
Can't remember when the targeting stopped, it was many, many years ago.
spookly said:
PCP isn't for me either, but if there has been shady practices then there should be consequences.
Big companies get away with treating customers like crap without consequences far too often.
If they've done something against FCA rules then they deserve what they get.
Quite. I think commenters so far are missing the point of the investigation. Big companies get away with treating customers like crap without consequences far too often.
If they've done something against FCA rules then they deserve what they get.
Plenty of people have experienced salespeople going over the figures and explaining how the vehicle will almost certainly be worth a lot more than the GFV so you’ll definitely have equity to roll over to the next deal.
Sometimes that turned out to be the case, and sometimes it didn’t.
I can see how that would be classed as mis-selling.
Sometimes that turned out to be the case, and sometimes it didn’t.
I can see how that would be classed as mis-selling.
Alex Z said:
Plenty of people have experienced salespeople going over the figures and explaining how the vehicle will almost certainly be worth a lot more than the GFV so you’ll definitely have equity to roll over to the next deal.
Sometimes that turned out to be the case, and sometimes it didn’t.
I can see how that would be classed as mis-selling.
Surely that’s nothing more than a salesman’s opinion? Anyone that believes anything that comes out of a car salesman’s mouth is an idiot.Sometimes that turned out to be the case, and sometimes it didn’t.
I can see how that would be classed as mis-selling.
Alex Z said:
Plenty of people have experienced salespeople going over the figures and explaining how the vehicle will almost certainly be worth a lot more than the GFV so you’ll definitely have equity to roll over to the next deal.
Sometimes that turned out to be the case, and sometimes it didn’t.
I can see how that would be classed as mis-selling.
That may be true, but it is not what this case is about.Sometimes that turned out to be the case, and sometimes it didn’t.
I can see how that would be classed as mis-selling.
When we, took over a failed dealership, we saw that many PCP's were "sold" to people who weren't given a proper explanation of how it worked or given all options of purchase, many had traded in cars that they owned, using all the value as a deposit, thus they had good monthly payments, they come back at the end, they don't have the large deposit they had previously, which was then reflected in much higher monthlies. Most likely being due to heavy incentives and bonuses.
I alway explain sure trade in the car or put in a large deposit to achieve a certain monthly payment, just bear in mind you'll need a similar deposit in 3 or 4 years to achieve a similar monthly.
The terminology has changed to, the balloon or final payment is no longer reffered to as the GMFV (Guaranteed Minimum Future Value), this terminology was confusing to customers, unless, explained, many thought that this was the amount you will get back at the end of the agreement. You still get them though, I had a young girl in last year, she had a ropey A-Class, standard white diesel, never serviced, dash lit up like a Christmas tree, steering felt weird, she wanted to reduce her monthlies, her settlement was circa £6k, we valued it based on the engine management issue being fixed, she had £250 equity, the car she was interested in was a similar monthly payment to what she was currently paying, she assumed that the circa £6k we were giving her for her car was hers to use as the deposit, no end of me explaining that the existing finance needs to be settled with that £6k, thus leaving her with £250, she just didn't get it.
I alway explain sure trade in the car or put in a large deposit to achieve a certain monthly payment, just bear in mind you'll need a similar deposit in 3 or 4 years to achieve a similar monthly.
The terminology has changed to, the balloon or final payment is no longer reffered to as the GMFV (Guaranteed Minimum Future Value), this terminology was confusing to customers, unless, explained, many thought that this was the amount you will get back at the end of the agreement. You still get them though, I had a young girl in last year, she had a ropey A-Class, standard white diesel, never serviced, dash lit up like a Christmas tree, steering felt weird, she wanted to reduce her monthlies, her settlement was circa £6k, we valued it based on the engine management issue being fixed, she had £250 equity, the car she was interested in was a similar monthly payment to what she was currently paying, she assumed that the circa £6k we were giving her for her car was hers to use as the deposit, no end of me explaining that the existing finance needs to be settled with that £6k, thus leaving her with £250, she just didn't get it.
Some actual useful info on this can be found here, rather than just a headline that people will read and get the wrong end of the stick:
https://www.fca.org.uk/carfinance
Maybe I am naive here, but in my book that's just business. A lot of companies work by finding something for one price, then selling it on to customers at a higher price. As long as they were upfront and honest about the rate being charged and didn't lie to the customer along the way then the customer simply bought what was offered.
There are probably a great deal of details missing here, and the ombudsman alongside the FCA will have a lot more information than is presented here, so my assessment could be way off the mark. The sentence "As long as they were upfront and honest and didn't lie to the customer" is doing a lot of the heavy lifting here, and is probably at the heart of the FCA investigation.
https://www.fca.org.uk/carfinance
FCA said:
Before January 2021, some lenders allowed brokers (the person that arranges the loan, for example, your car dealer) to adjust the interest rates they offered customers for car finance.
Typically, the higher the interest rate, the more commission the broker received. This was known as a discretionary commission arrangement.
Discretionary commission arrangements created an incentive for brokers to increase how much people were charged for their car loan.
... there have since been a high number of complaints from customers about how much they were charged ... Providers are rejecting most of these complaints, because they believe they haven’t acted unfairly and haven’t caused customers to lose out.
In short the dealer goes and finds a deal from a finance company for one rate, then offers a higher rate to the customer. The customer can choose to take that rate or not, but if they do the dealer gets some slice of the difference.Typically, the higher the interest rate, the more commission the broker received. This was known as a discretionary commission arrangement.
Discretionary commission arrangements created an incentive for brokers to increase how much people were charged for their car loan.
... there have since been a high number of complaints from customers about how much they were charged ... Providers are rejecting most of these complaints, because they believe they haven’t acted unfairly and haven’t caused customers to lose out.
Maybe I am naive here, but in my book that's just business. A lot of companies work by finding something for one price, then selling it on to customers at a higher price. As long as they were upfront and honest about the rate being charged and didn't lie to the customer along the way then the customer simply bought what was offered.
There are probably a great deal of details missing here, and the ombudsman alongside the FCA will have a lot more information than is presented here, so my assessment could be way off the mark. The sentence "As long as they were upfront and honest and didn't lie to the customer" is doing a lot of the heavy lifting here, and is probably at the heart of the FCA investigation.
Edited by murphyaj on Friday 12th January 09:07
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