Car dealers are taking buyers for a ride by not being crystal clear regarding exactly how much interest they are going to pay on a car, says Which? Car. The consumer magazine sent three researchers to 15 car showrooms throughout the UK belonging to 5 of the leading brands (Audi, Citroen, Fiat, Peugeot and Vauxhall) in January 2010. The discussions with prospective buyers were recorded and the transcripts analysed by industry experts.
Generally, the particulars associated with car finance deals were not adequately spelled out and on a number of occasions interest rates were not actually brought up in the course of the thorough undercover investigation. Not one of the sales personnel at the fifteen dealerships verbally informed researchers the actual overall cost of the interest on a finance agreement. Two thirds neglected to point out the APR and a third did not incorporate it on their written quotation either.
Without this detail, it is not possible for a purchaser to figure out how much interest they would pay on a finance deal. Not including the APR in a written quotation also contravenes the Consumer Credit Act. One particular sales person even declined to give a written quote at all, mistakenly claiming that to do so would probably break the law.
On a regular car such as a £13k Fiat Bravo*, a bank personal loan might cost a buyer £15,319 while hire purchase with payment protection insurance might cost them £18,433 – a difference of more than £3k. Not only are consumers losing out on thousands of pounds, a number of car dealers are failing to adequately making clear the risks of complex, highly-priced products.
Peter Vicary-Smith, Chief Executive, Which?, states:
“When you take out a mortgage, the bank or building society has to clearly state APR rates up front, and explain terms and conditions fully. We think car finance deals should be conducted in the same way. We urge car buyers to avoid showroom finance deals if they think dealers haven’t given them all the necessary information.”
The consumer champion revealed its findings to the OFT, which said it was disappointed some dealers didn’t seem to be aware of their obligations, or were simply refusing to conform. The OFT promised to take enforcement move where required.
*Illustration prices are quoted for a Fiat Bravo hatchback 1.4T Jet 120 Active 5 dr for £300-£350 per month repayment, and an initial down payment of £1,000. Figures are accurate as at January 2010
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