Motorists may have paid ‘thousands more’ in car finance after Martin Lewis concern
Drivers could be awarded car finance compensation payouts this Autumn with the FCA looking into car finance interest payments.
A motoring expert has claimed some drivers may have unknowingly paid thousands more in mis-sold car finance interest payments.
Edward Cockill, Director of Uckfield Motor Services stressed some petrol and diesel owners may have paid more than necessary every month over the entire course of a sizeable finance deal.
Martin Lewis has raised awareness around a Financial Conduct Authority (FCA) investigation into motor finance firms.
The experts are undertaking a thorough probe after concerns around “widespread misconduct” which may have led to “consumers losing out”.
It involves discretionary commission arrangement (DCA) charges where lenders allow dealers to increase interest charges.
@uckfieldmotorservices Did anyone see the recent @Martin Lewis ♬ original sound - Uckfield Motor Services
However, many drivers were unaware of these deals and may now be owed compensation once the FCA analysis is complete.
Speaking on @uckfieldmotorservices TikTok channel, Edward said: “What’s happening is car dealers were allowed to set their own interest rates on the finance packages that they were sending to their customers for the cars.
“So the finance company would lend let’s say 6.9 percent, the car dealers were allowed to input whatever interest or percentage on top of that.
“So for example I've just put some figures in there. This is on a £20,000 loan, so say for example the lender would allow the car dealer 6.9 percent, the dealer could then bump that up to 10.9 percent for example.
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“So 6.9 percent over five years you would be paying £395 per month and over the course of that £3,700 in interest.
"But at 10.9 percent you’ll be paying £433 per month. So that’s nearly £40 more per month and £6,000 worth of interest over that five years.
“That’s nearly £3,700 more than what you would have been paying at 6.9 percent.
“And what was happening is because they were selling these higher interest rate packages they were getting massive commissions back from the elders on it.
“So It’s all a bit of a storm at the moment. It’s gonna be interesting to see what comes out of this.”
Martin has previously suggested every motorist affected by the car finance could be owed a staggering £1,100 payout.
However, Martin has previously admitted he fears that a certain amount of interest will be deemed fair with any affected drivers only getting back the difference.
Drivers who purchased cars on finance between 2007 and 2021 are most likely to be impacted with Martin confirming the probe will end this Autumn.
He previously told ITV: “The FCA has launched an investigation this January that it’s due to report in September.
"My view is it would not have done that unless it thought there were potentially systemic, wide-scale mis-selling. This is quite an unprecedented thing it’s doing here."
