Car finance has long been a preferred method of funding a car but, things are changing slightly in 2021 and here is what you need to know about the ban of the discretionary commission models in motor finance.
Traditionally, there have been commission incentives in the form of percentages that have been given to those who complete finance deals. The dealership or the salesperson was given commission by the lender when the sale was completed. There were varying rates of commission and interest which made the landscape somewhat uneven and it has led to certain dealers or salespeople favouring certain finance houses who offer the best or biggest incentives.
However, the FCA has confirmed that in 2021, these models will cease, creating a fair and even playing field for finance companies, and customers.
By banning these rates, there will be an increased competition within the finance field and customers will be protected against larger APR rates and inflated finance deals.
The FCA stated that “We estimate that consumers could save £165m because of today’s action.” Which is amazing to see and we welcome this change in the field.
It is important for customers and dealers to be aware of this chance and to act accordingly before it comes into effect. It is also worth noting that there will be ‘mystery shopping’ style research after this comes into play to ensure that dealerships are not seeking other commission based finance deals to supplement this loss in income.
If you have any questions about these changes or you are a dealership looking for a reliable and fair finance partner, we would love to speak to you. At We Finance Any Car, we are proud to provide outstanding finance deals and we work with all our dealers and customers on an individual basis. Please get in touch to find out more.