Dealers will be looking for new ways to compensate for lost earnings, consumers are being warned, after the shock ruling that they must either disclose or drop ‘secret’ commissions charged on finance deals for new and used cars. Commissions paid unknowingly by customers have accounted for large chunks of profits for dealers, which have teams dedicated to growing revenue from finance and insurance deals, or ‘F&I’ .
“The only way to avoid the disclosure and consent process is to take no commission.” Most finance companies are back in business after briefly pausing operations to digest the meaning of the ruling, which was brought specifically against Black Horse and FirstRand Bank by three affected consumers. The changes mostly affect buyers of second-hand cars through dealers, said Young. New cars are mainly financed through the manufacturers’ own finance house.