I don't think that I am referring to you, as I understand it you are a car finance broker not a car salesman in a dealer.
However, if you give advice on car finance and stray into advising your clients about the merits of taking on a substantial credit agreement against the backdrop of keeping investments where they are then, yes, I do think that you should be thoroughly regulated in your role to improve standards across the industry.
My main concern though are showroom salespeople who will say anything to get their customer to buy the car on finance solely to earn more commission on the sale, these conditions cannot be expected to deliver a positive outcome.
In fact, the more I think about it the more the whole scenario stinks. Extra discount available only if you take our finance, eh?
Someone posted that they had been offered 9% finance which they talked down to 7%, what?
Individual salespeople making up interest rates to boost commission, great deal?
As I said earlier, we are no longer talking about cars costing a few thousand, lots of MB and BMW offerings are now sold for big money.
The industry is in need of an overhaul.
Haha I was only teasing. In terms of discounts etc, it depends on many many factors and not all are to try and fleece customers. Notice I say not all? LMAO what I mean by this is there's a few schools of thought. People do not in any way shape or form have a f*cking clue how interest rates work, they think they're savvy and they know nothing and THIS is why dealers do what they do. An APR can be manipulated VERY easily whereas a flat rate cannot. Here are some examples...
If a dealer makes £1000 profit on a car there are three ways he can do this
1. £1000 added to the price of the car = low interest rate because you're selling it out at base rental
2. £1000 added to finance and full discount given on the car = high interest rate because you're making your profit on the rate
3. a mixture of the 2 = reasonable rate for obvious reasons as above.
Here's another random piece of info... the higher a final payment is on an agreement, the lower an APR
Even though the flat rate does not change, interesting no?
Now... If they give you the maximum discount on the car and a high interest rate finance quote they risk the customer saying "I'll buy the car but arrange their own finance" - uh oh... no profit for mr dealer #screwed
If they give a little to no discount and then a "deposit contribution" it's their way of getting you to pay more for the car while sugar coating it and and tempting you into taking their finance because it gives the impression you're receiving a better deal.
Another one is 0% APR "representative". Representative being the key word. Basically they calculate the cost of borrowing money which = £x over the term based on borrowing £y, they then calculate if they can swallow all that interest within their dealer margin ie the difference between what the car costs them and the list price they're selling it at. If the answer is no, they reduce the loan to value eg they offer 0% APR with a 50% deposit. 50% deposit = 50% less interest because you're borrowing 50% less money and therefore easier to swallow into their margin. This is why you never get 0% interest AND huge discounts because they're all just sugar coating to try and tempt people into buying before the deal ends.
There are times where a finance house will receive an increased level of discount on a car aka VRB (volume related bonus) but this is often only available on certain types of contract for example a contract hire because the quote does not show the on the road price of the vehicle. however any purchase scheme legally has to show the on the road price so in these instances they cannot and will not give you as much discount in many instances. Why? Because if they gave you the full discount they receive the first thing many customers will do is walk into said brands franchised dealer and say "can you beat this?". Well there's a fundamental issue with this. A finance company will register thousands of cars per year. A private punter buys one or two cars every few years so clearly won't receive the same support. Being a franchised main dealer they therefore will not physically have the same levels of discount at their disposal as a finance company and it causes an internal political sh*tstorm because why for example can x finance company buy a C class for less than a franchised Mercedes dealer can? Well this is why. But because of that it leaves a bitter taste and would put people out of business eventually.
