Is this fair?
Many people have no problems with the way that their car finance schemes are arranged. However, the FCA (Financial Conduct Authority) wants to raise awareness of the way that some brokers and dealers may be unfairly profiting from interest on car finance. Some retailers and brokers receive commission based on how much interest their customers pay for the car loans. This means that the organisers of these loans have no incentive to act in the customers’ favour.
What Can We Do?
The FCA wants to limit the power of people who sell car loans to profit from acting against their customers’ interests. This action is prompted by the revelation that some brokers are charging customers as much as a thousand pounds in interest charges. They are solely motivated to make more commission for themselves.
The FCA advises that customers need to be given more information on how much commission they are being charged. Their hope is that these proposed changes would make the organisers of insurance more likely to act responsibly towards their customers. The final decision on the proposed rule changes is expected to be in early 2020.Whether the changes will save consumers money in the long run is uncertain for now.
When you get a car on finance, you need an extra layer of protection than simple insurance can provide. Say you were to have an accident, and your car were to be written off. Your insurance would probably not provide you with enough to pay off your remaining finance. This is because insurers usually only pay out the value of the car at the time of the accident. However, GAP Insurance provides an extra layer of cover. It pays the difference between the insurer pay out, and the remainder of the finance you have left to pay. Get GAP Insurance, and have peace of mind that you will have enough to pay off your finance, whatever happens.