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Car finance investigation exposes huge problems in the UK for British drivers


Buying a car can be incredibly difficult and expensive and could land motorists in problems if they aren’t correctly informed about what they are purchasing. An investigation by Admiral Car Finance has revealed that drivers aren’t being given the full picture about the type of car finance that is on offer. A UK-wide mystery shopping exercise saw researchers visit different forecourts to see what the buying experience was really like. The shoppers were requested to visit forecourts to assess the car buying experience as well as how they could finance their potential car purchase.

They were asked to report on the information provided by salespeople on the cost of car finance and the finance options available as well as whether they could use finance they had arranged themselves elsewhere, sometimes known as third party finance.

Some car dealers said they did not accept finance from a third party, confusing consumers about their right to shop around for the best deal. 

A car dealer in Bristol told the mystery shopper, they “could not accept finance from a third party” stating he was told he would have to take the dealer’s finance if he wanted to pay on finance.

In a similar situation at a separate dealership in Bristol, the mystery shopper said: “They told me they do not accept finance from third parties and said that it makes the process longer and more complex.”

Even if they did accept third party finance, many shoppers said they felt they were not being given balanced information. In Southampton, the mystery shopper said: “I felt steered away from other finance options… and they gave the impression that no other option would be suitable.” 

Car finance

Motorists aren’t being given all the required car finance information (Image: GETTY)

The findings highlighted the current lack of awareness some consumers have over their freedom of choice to arrange car finance independently online rather than having to take the finance offered by the garage where they purchase their car.

Commenting on the investigation, Scott Cargill, UK CEO of Admiral Car Finance, said: “Admiral PCP and HP products pay the dealer directly, so its misleading to suggest the process becomes longer and more complicated by shopping around and taking a credit agreement from another provider.

“To ensure they get the best finance deal for them, customers should focus on the APR and compare deals across the market. They should also try to avoid being swayed by low monthly payments that could in fact be a more costly option when considering the total amount repayable.”

The results of Admiral Car Finance’s investigation into the process of buying a car are released following the Financial Conduct Authority’s update on its own inquiry into the motor finance market. 

One in five forecourts suggested that the mystery shoppers took out finance and saved their cash.

One undercover shopper in Leeds said: “I explained that we had the money set aside but they informed me that it is better to keep that as you never know what is around the corner and to take their finance and that I wouldn’t notice the amount going out each month.”

Another shopper in Newcastle-Upon-Tyne said: “I told the salesman I am able to pay cash, but I was also shopping around looking at third party finance deals. 

car finance

Motorists could be making the wrong decisions (Image: GETTY)

“I asked if there were any other finance options available with them. The colleague told me the finance would be better than cash as it would free up all of the cash I was going to use on the car, leaving more options for it to be spent on.”

Commenting on the investigation, Scott Cargill, UK CEO of Admiral Car Finance, said: “Having a rainy-day fund is a great safety net when it comes to personal finance, so you can cover unexpected expenses.

“However, before taking on an extra monthly commitment, consumers need to think carefully about the affordability of an extra outgoing on their monthly budget, as well as the overall difference in cost between the options. 

“The double-digit APRs dealerships offer, in comparison to Admiral’s representative rate of just 5.9 per cent, effectively subsidise commission to the garage and will always make credit options prove more expensive than paying cash upfront.

“All of the dealerships visited by our mystery shoppers failed to mention that cash would prove a cheaper option overall, and 20 per cent even suggested taking finance instead of using cash that our shoppers made clear was available.”

Nearly half of the visits left mystery shoppers feeling confused and unsure of the detail of the different finance options on offer.

One undercover shopper in Birmingham said: “I didn’t feel I could make an informed choice.”

car finance

Mystery shoppers evaluated the buying process (Image: GETTY)

Another in Newcastle stated: “The information about finance was lacking”.

Someone in Leeds said they were told they would not be given any information without a credit search taking place: “Without this, they did not go into discussing details with me.”

A shopper in Bristol had a similar story: “The colleague would not offer any financial information without completing a credit check. They were even reluctant to give an average range of APR when I pushed.”

They added: “I left confused and not as well informed as I could have been.” 

The majority of mystery shoppers were not told what commission the garage would have received on finance had they gone through with the purchase.

At a dealership in Southampton the shopper said: “I was told they only get commission on selling the cars, not on organising the finance. I was not told how much commission was involved”.

At a forecourt in Cardiff, the mystery shopper said: “they would not tell me whether they got commission on a finance deal or the amount of commission they would get.”

UK CEO of Admiral Car Finance, Scott Cargill, commented: “Buying a car is one of the bigger purchases a consumer will make and it’s understandable that people are often nervous about the process and making a wrong decision.

“The results of our mystery shopper exercise demonstrate that the sales process is confusing, and sometimes misleading, particularly when it comes to used car finance.

“Our advice to customers is to compare the interest rates and the total amount repayable on any financial agreement, rather than solely comparing monthly repayment amounts.

“Know your budget and ensure you can afford anything you sign up to over the time you expect to keep the car.

“Take your time, shop around and don’t be rushed or pressured into a quick decision.”



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