Car salesmen ‘profiting from rip-off loan deals’

CAR finance salesmen are issuing rip-off loans to pay themselves commission, City watchdogs fear.

After an initial investigation into the sector, the Financial Conduct Authority (FCA) said yesterday it had concerns that salesmen were unfairly applying higher interest rates to loans.

The FCA will now conduct a mystery shop to identify whether this is the case. It comes as a record number of cars are being bought on finance deals, as for the first time more than a million drivers bought cars on deals over the past year, according to industry figures.

Fears have been growing that a combination of falling diesel car prices and irresponsible lending could leave thousands with debt they cannot repay in the event of an economic downturn, prompting the review.

It will also look at whether consumers have the right information to make informed decisions on borrowing.