Have you been overcharged for your car finance deal?

Up until recently, unsuspecting car finance customers have been overcharged thousands of pounds in interest charges by motor dealers cashing in on commissions across the country. 

Car and money concept

The findings were revealed by financial watchdog, the FCA (Financial Conduct Authority), found the widespread use of commission models, which allow brokers to set the customer interest rate and earn higher commission, could be leading to conflict of interest. 

The FCA’s Jonathan Davidson said: “We found some motor dealers were overcharging unsuspecting customers over a thousand pounds in interest charges in order to obtain bigger commission payouts for themselves. We estimate this could be costing consumers £300 million annually. This is unacceptable and we will act to address harm caused by this business model."

A ban on discretionary commission models has been in place since 28 January 2021, however, this doesn’t mean that all commission-based finance is banned, so it’s still extremely important to ensure that you don’t overpay for car finance.  

Make sure you don’t overpay for car finance - your car finance checklist

To make sure you don’t end up over-paying for your car finance:

  • Shop around – you don’t have to take finance from the car dealer, it is also available from lenders like Admiral. Our car finance is only available directly to car buyers, not through car dealers, so through cutting out any commission, we are able to offer our customers lower rates. Check out our car finance calculator here.
  • Do your research – make sure you understand the difference between different types of car finance like PCP and Hire Purchase, for example PCP means paying a lump sum (called a balloon payment) if you want to keep the car. We have pulled together an in-depth guide on this here
  • Understand the numbers - you should know how much you’ll be paying every month and in total before agreeing to any finance deal. We put together a car finance checklist to help you compare different car finance deals and choose the right one for you

If you want to know more about how car dealers work, we have some insider information after speaking with three car salesmen from across the UK who shared tips, which could work in your favour when you’re buying a car:

  • Make friends with the salesperson, rather than thinking they’re someone who’s trying to rip you off
  • Be honest with salespeople about your expectations, and deals you’ve seen elsewhere
  • The best time to buy a car is either quieter times, the end of a quarter or when a car model is superseded by a newer model
  • Checking the extras – if you’ve paid for extras like paint protection or interior fabric protection, test that they’ve actually been put on
  • And even our secret salesmen recommended you shop around for finance before heading into the showroom, and understand what you’re signing up for

Interested In finding out more about Admiral’s car finance offers? See all the options we offer and use our car finance calculator here.


Take control of your Car Finance