Millions of British motorists are being systematically overcharged on their car finance deals in a widespread industry practice that's lining the pockets of dealers with secret commissions.
The Hidden Cost of Your New Car
An exclusive investigation has uncovered how car buyers across the UK are paying significantly more than they should for vehicle finance, particularly on popular Personal Contract Purchase (PCP) agreements. The scandal centres around discretionary commission arrangements that incentivise dealers to increase the interest rates charged to customers.
How the Scam Works
Under these controversial arrangements, finance companies allow car dealers to set the interest rate charged to customers. For every percentage point the dealer adds above the base rate, they receive a generous commission payment directly from the lender.
The shocking truth: Many drivers are completely unaware that their dealer effectively decided how much interest they would pay, creating a clear conflict of interest that has cost consumers thousands of pounds.
Real Victims, Real Consequences
One affected driver, Sarah from Manchester, discovered she'd been paying nearly double the interest rate she could have secured elsewhere. "I trusted the dealer to give me a fair deal," she explained. "Finding out they'd inflated the rate just to get more commission made me feel completely betrayed."
The Scale of the Problem
- Over 90% of new car purchases in Britain use finance deals
- PCP agreements now dominate the market
- Secret commissions have been commonplace for years
- The Financial Conduct Authority has identified serious consumer harm
What You Can Do Now
If you've taken out car finance in the last six years, you may have a claim for compensation. The Financial Ombudsman Service has been ruling in favour of consumers in these cases, ordering lenders to refund the excess interest and commissions.
Experts recommend:
- Gather all your finance documentation
- Check what interest rate you're actually paying
- Contact the Financial Ombudsman if you suspect misconduct
- Consider joining group action claims
Industry Changes Ahead
The Financial Conduct Authority has now banned the controversial commission models, but millions of historic agreements remain affected. Consumer groups are pushing for automatic compensation for all affected drivers, rather than requiring individuals to fight their own cases.
This scandal serves as a stark reminder that when it comes to major financial decisions, independent advice and thorough research remain your best protection against industry practices that prioritise profit over fairness.
