RAC Cars News


Car Finance Deals Leading To Complaints

By raccars Published

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Over a thousand people have complained to the Financial Ombudsman Service so far in 2015, as a result of finance deals they secured when buying a new car, according to the Daily Mail. And the majority of these complaints stem from the fact that people can be hit with bills and charges they are not expecting, because of the way that many hire-purchase financing offers are organised.

Hire-purchase financing has risen to prominence in recent years, since it gives drivers a bit more flexibility when buying a car. Rather than getting a fixed finance package, they can commit to pay a monthly fee for a set number of years, and then offer up a lump sum at the end if they want to keep the car, or avoid paying it by returning it to the dealership.

This kind of arrangement is essentially an extension of a rental agreement, with the final lump sum figure being set out when the contract is signed at the point of sale. However, 1,271 people have already complained about these deals this year, with the majority arguing that they are being overcharged for their vehicles, resulting in an ongoing dispute with the company that provided them with the finance in the first place.

Another common complaint received by the ombudsman is that finance firms can be fickle about deciding whether or not a vehicle is in a state of good repair at the end of a lease contract, if the customer decides to return it. This can lead to additional charges being levelled against drivers, even if the complainant does not believe that they are justified.

The good news for consumers is that about 40 per cent of the claims made to the ombudsman are upheld, which shows that it is well worth raising this issue, if you feel that you have been impacted by some foul play as part of a hire-purchase deal on a new car.

The influx of complaints may well continue, as new figures, published last week by the Finance and Leasing Association, revealed that the number of people taking finance packages when purchasing a new car in the UK was up by 10 per cent, year on year, in 2014.

This means that nine out of 10 people who buy a new car today will be taking some kind of finance offer, whether it is the hire-purchase approach or the more traditional route.

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