No job? Have an Audi
In a showroom, a young driver with no income is offered a brand new car – using the controversial loan scheme that will saddle him with debt... and threatens a new financial crisis
IN a showroom gleaming with luxury Audis, a dealer attempts to make a sale.
The smartly dressed young man, with slicked-back hair, is sitting behind a desk rolling a large gold ring around his finger. Light streams into the room through floor-to-ceiling windows.
‘You’ve had credit before?’ he asks, leaning forwards. ‘You’ll be fine then.’
The salesman is trying to sell a £15,000 Audi A1 hatchback to a 24-year-old who has wandered in from the street.
The buyer – an undercover Daily Mail reporter – has said he is out of work. He is applying for jobs, he says, and hopes to find one soon – but he fears he won’t pass a credit check. Surely this means he cannot afford a brand new Audi?
The confident dealer appears to have no qualms about offering him the car. He declares that for monthly payments of £215 for just 48 months, the unemployed buyer can happily drive out of the Edinburgh showroom. And after the deal ends, all he needs is another £6,958 to own it outright.
The scenario seems unfathomable. How can such a high-value car loan be offered to someone in their early twenties who doesn’t have a job?
Yet an investigation by the Mail has found that similar conversations are taking place in showrooms across the country.
Reporters visited 22 dealerships in England and Scotland, saying they were in their early twenties and either unemployed, on low incomes or trying to buy a car despite having poor credit ratings. Half of the dealerships – including ones selling Audis, Maz- das, Suzukis, Fords, Vauxhalls and Seats – told them they could have a brand new car without paying a penny up front.
In each case they were offered Personal Contract Purchase (PCP) deals – a type of car loan that makes up nine in ten sales of cars bought on finance in Britain.
These deals offer smaller monthly payments than traditional car loans. This is because under PCP deals, the customer only pays off a portion of the car’s worth over a few years, rather than paying off the full value of the vehicle.
When this finishes, they can choose to pay off the rest of the car or hand it back and take home a new motor on another PCP contract. The smaller monthly payments make it much easier for people to pass credit checks.
Experts believe dealerships are encouraged to offer PCP deals by finance firms because they are incredibly lucrative, and hook drivers on a cycle of new deals every three to five years.
Back at the Edinburgh showroom, another salesman clarifies why our reporter could buy the car without having a job.
He says current employment can be disregarded if a buyer has a decent credit history.
‘[Having a job] won’t make any difference,’ he says. ‘ We drop it down to the finance company, they’ll do a credit check on you.
‘It’s not a case of you not having a job today and having a job tomorrow. We just need to see what the finance company says.’
Our reporter did not proceed to the credit check so it is unknown whether he would have been accepted for finance. In Stoke-on-Trent, Staffordshire, a reporter tells a Suzuki salesman that he is 24 and earning £18,000 a year in his first full-time job after graduating and taking a six-month break to travel the world. The salesman sits his customer on a large lime green armchair and sips coffee while flicking through deals on an iPad.
He says he ‘shouldn’t have a problem’ buying a brand new car worth £12,999 without paying a deposit. The deal, for a Suzuki Swift SZ-T, costs just £169 a month for 48 months, he says. This is £8,112 over four years. He would then have to pay a further £4,824 to own it. The
Hook drivers on cycle of new deals
‘Our threshold is very, very low to get passed onfinance.You shouldn’t have aproblem.’
salesman offers advice on how to pass a credit check.
Crucially, he should leave out the six months spent travelling and make out that he went straight from his studies into work. He says: ‘In all fairness, for your profile, you want to be saying you have been working for six months, prior to that you were at university and you mostly had part-time income.’
The reporter then makes an alarming admission. He says he is behind on some credit card payments. Does that matter?
‘At the moment our threshold is very, very low to get passed on finance,’ the salesman says.
‘All I can say to you is if you’re earning £18,000 – tick. If you have an average outgoing for bills, then you shouldn’t have a problem.’
In a Mazda showroom in Leeds, a reporter says he is working parttime after travelling abroad.
‘Unless you’ve got bad credit, we generally don’t have a problem with it,’ the salesman says.
‘If you’re buying a £25-£30,000 car, then they start asking about how much you earn and will want to check it. But at the moment, when you’re looking at an £11-£12,000 car, it’s all right.’
At other showrooms, the reporters are told they will only fail credit checks if they have a County Court Judgment or a reason for adverse credit. All of the car finance firms deny lending irresponsibly. They said the Mail’s journalists did not go through with credit checks, which would flag customers with poor credit and decline their applications. After being contacted by the Mail, Vauxhall and Suzuki launched investigations.
Suzuki Finance said offers were subject to checks on credit and affordability. A spokesman said it took ‘a prudent approach to lending’. A spokesman for Mazda said its underwriting team would have picked up that the customer was in temporary employment.
Volkswagen Financial Services, which finances Seat and Audi cars, said it expected salesmen only to give customers information that was ‘appropriate to their financial demands and needs’.
The firm said all customers were evaluated through multiple credit reference agencies to ensure they could maintain repayments, and dealers had no involvement in lending decisions.
Ford Credit did not respond to requests for comment.