£300m car loans sting

Buyers overcharged in finance deals

A FINANCE racket is costing car buyers £300million a year.

The Financial Conduct Authority found “serious concerns” about the way some dealers rake in extra commission from overcharging for car loans.

Many new cars are bought on finance. But the FCA found lenders providing it were giving brokers, including those based within car dealerships, a certain amount of freedom to decide what rate to charge individual buyers.

It resulted in some car buyers paying “significantly more” than they should, the probe concluded.

For example, someone taking out a £10,000 four-year loan could end up paying £1100 over the odds because of one type of commission, which increases the higher the rate given to the buyer.

The FCA found issues with cars INSURANCE giants Aviva has appointed Maurice Tulloch, the head of its international arm, as its new chief executive.

He will replace Mark Wilson, who is standing down after more than five years at the helm. bought using Personal Contract Purchase, Hire Purchase and Conditional Sale.

The FCA’s Jonathan Davidson said: “This is unacceptable and we will act to address the harm caused by this business model. We estimate it could be costing consumers £300million annually.”

Options include strengthening existing FCA rules through to banning certain ways dealers earn commission.

Today’s report says: “It is not clear why brokers should have such wide discretion to set interest rates or to adjust the rate to – in effect – pay themselves more commission.”

James Fairclough, chief executive at AA Cars, said: “The industry needs to do more to help customers really understand the choices open to them.”