Earlier this year, new regulations about how finance is sold came into force. With the majority of cars sold at a dealership bought with some form of finance, car buyers need to be aware of what’s changed and what the new law means for them when opting for an agreement supplied by, or through, the dealer.
Whether you’ve used dealer finance before or not, this article highlights recent changes to the law that aim to make dealer finance more customer-friendly.click here car finance https://www.yesauto.co.uk/car-finance
First off, the new regulations from the Financial Conduct Authority (FCA), which came into effect on 28 January, give car buyers more control over their finance journey. It’s also worth keeping in mind that ‘dealer finance’ rarely means the dealer is actually lending its own money. More typically the dealer offers finance from a host of well-known banks or specialist in vehicle finance. These lenders are also governed by the same new strict rules.
More than 93% of private new car buyers opted to use dealer finance last year, according to data published recently by the Finance & Leasing Association. While the percentage of people using dealer finance for a used car is not as high, uptake is expected to increase following the introduction of new FCA rules for dealer finance.
The new regulations were brought in to “break the strong link between customer interest rates and broker earnings to decrease financing costs for consumers”, according to the FCA. So what’s changed?
Until 28 January, dealers could adjust finance prices to increase their commission; this has now been banned. The new FCA rules mean dealers can no longer negotiate on finance interests rates. To quote the FCA: “Preventing the use of this type of commission removes the financial incentive for brokers [dealers] to increase the interest rate that a customer pays and gives lenders more control over the prices customers pay for their motor finance.”