Wheeler dealers drive Which? to distraction

Car dealers are taking customers for a ride by not being clear about how much interest they’ll pay on a motor, says Which? Car.

Overall, details of car finance deals weren’t properly explained and on some occasions interest rates weren’t even mentioned during the rigorous undercover investigation. Not one of the sales staff at the 15 dealerships verbally told researchers the total cost of the interest on a finance agreement. Two thirds failed to mention the APR and a third didn’t include it on their written quote either.

Without this information, it’s impossible for a buyer to work out how much interest they’d pay on a finance deal. Not including the APR in a written quote also contravenes the Consumer Credit Act. One salesman even refused to give a written quote at all, wrongly claiming that to do so would break the law.

On a typical car such as a £13k Fiat Bravo, a bank loan would cost a customer £15,319 whereas hire purchase with payment protection insurance would cost them £18,433 – a difference of more than £3k. Not only are customers losing out on thousands of pounds, some car dealers are failing to properly explain the risks of complex, expensive products.

Peter Vicary-Smith, Chief Executive, Which?, says: “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 reported its findings to the OFT, which said it was disappointed some dealers didn’t appear to be aware of their obligations, or are simply refusing to comply. The OFT promised to take enforcement action where necessary.