MARTIN Lewis has warned Brits of one trick used by dodgy car dealers to make you pay thousands more for no reason.
Speaking on his ITV show tonight, Martin highlighted how you could have been deceived on your car finance deal.
ITVMartin Lewis warned Brits that they could have had overpaid unknowingly[/caption]
The Money Saving Expert said that millions of motorists have overpaid in fees without knowing due to “hidden commission”.
If you bought a car, van, campervan or motorbike on finance before January 28 2021, Martin says you may be affected.
Martin revealed that around 40 per cent of these purchases had hidden “Discretionary Commission Arrangements”.
Lewis‘ key point was that lenders let brokers and car dealers make up interest rates to increase commission.
Brokers could then hike up interest and charge more in order to receive more commission.
It meant that those purchasing vehicles did not know it was not a fixed-interest rate and could actually be negotiated.
This practice was banned by the Financial Conduct Authority (FCA) in 2021 – but the regulator has now launched a new investigation that could lead to overpaid interest being paid back to anyone who is affected.
The investigation will look into personal contract purchases and hire purchase, but it won’t include personal contract hire, also known as leasing.
The FCA is currently scheduled to publish its findings on September 25, 2024.
Martin Lewis this evening said that billions of pounds could be returned to millions of drivers.
Speaking on his ITV show tonight, Martin stressed that you need to check the date of your finance agreement, not the date you got your motor.
He added: “In my view this is likely to be the UK’s second biggest reclaim after PPI.
“Some estimate firms may be liable to repay up to £13 billion.”
Depending on the outcome of the FCA investigation, you could be owed money if you had a car, van, campervan or motorbike – but the vehicle had to be primarily for personal use, not for business use.
Martin explained how figures from the FCA suggests drivers paid £1,100 more interest on a typical £10,000 four-year car finance deal when there was a discretionary commission arrangement.
But the bigger your loan, the more money back you could be due, the MoneySavingExpert.com founder said.
Martin says that anyone affected should lodge a complaint immediately.
Your complaint should be made to the lender that provided the car finance.
This is the firm you actually paid each month – not the broker or car dealer.
Martin explained that the earlier you put a complaint in, the less chance you will be timed out with the deadline for complaints.
And he added that there is no need to use a claims management firm to complain, because it would take a cut of any money you’re due.
It also doesn’t matter if the car’s now paid off, so the agreement is over.
The Money Saving Expert says you are still eligible to reclaim, even if the car was repossessed.
Of course, if your purchase was interest-free you cannot claim for any cash.
Are you eligible for a claim?
This is for those who bought a motor vehicle on finance which includes cars, vans, campervans and motorbikes.
The finance agreement had to be taken out before 28 Jan 2021, and most likely after April 2007, according to Martin Lewis.
The sooner you log your complaint, the less likely it is you will be at risk of being timed out.
The vehicle had to be for primarily personal not business use.
Commuting comes within personal use, but using it more than occasionally for business or paying on your business will likely mean it won’t count.
Some vehicles that have been financed through a business agreement could be included, but only if they have been used for primarily non-business reasons.
You can reclaim on behalf of someone who has passed away but it is likely the lender will want to see a copy of the will.
You can claim if your purchase included Personal Contract Purchases (PCP)
Personal Contract Purchase are where you make loan-like repayments with the option to pay a larger ‘balloon’ payment at the end if you want to own the car.
If you bought using hire purchase you are eligible.
This is where you pay off the total value of the car in monthly instalments.
How to complain?
Ask whether your car finance included a discretionary commission arrangement.
If it did, lodge a time-stamped complaint
You can use this free tool on Money Saving Expert to help create a form to lodge a complaint.