How car loans became Britain’s latest consumer finance scandal

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How car loans became Britain’s latest consumer finance scandal
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Hidden commissions to car dealers inflated costs for buyers. The legal fallout could cost banks billions and restrict access to credit

When Marcus Johnson drove his Suzuki Swift out of a dealership in south Wales in 2017, he had no idea that he was helping to precipitate another major UK financial scandal. The 34-year-old factory supervisor from Cwmbran tells the Financial Times he was “in and out of the place within an hour” having put down a £100 deposit and signed a loan agreement to fund the rest of the £6,499 sticker price. The £154 monthly cost seemed in line with what some of his friends were paying.

Jenna Lewis submitted one of them after she realised that the Liverpool branch of the Arnold Clark dealership had jacked up the interest rate on a £13,333 loan for her purchase of a second-hand Audi in 2018 from a minimum of 2.68 per cent to 4.67 per cent. The increase cost her an additional £1,326.60 in interest, which was paid to the dealership as a commission by Barclays — and represented a fivefold increase on its usual payment.

 

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