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|Amount to Finance||£7,000|
|Total Amount Payable||£9,096.60|
‘Guaranteed’ car finance is a highly contentious subject. Although it’s widely promoted by car dealers and online brokers, it’s massively frowned upon by regulators. After all, it's almost impossible to comprehend how any legitimate lender could actually follow through on such a ‘guarantee’.
In reality, the phrase 'guaranteed approval' is simply used in order to tempt customers into applying for finance, at which point the 'guarantee' fails to materialize and a significant number of applications are subsequently declined.
Basically, yes. That’s because dealers and brokers don't actually control whether or not a customer is approved for car finance. It’s the lenders who have the final say over who they choose to lend their money to, or not.
These decisions are based around a complex set of criteria, something that's often referred to as a scorecard. Lenders naturally want to make sure the people they lend their money to will be able to repay it; something their business model relies upon. Ultimately, this means there's absolutely zero chance of everyone being guaranteed car finance by default.
Aside from lenders safeguarding their money, it would also be unethical to approve every car finance application. Lenders would end up lending money to people who clearly aren't in a position to repay it, pushing people further into debt.
The 2010 consumer credit (advertisements) act states that making false or misleading claims in relation to consumer credit, regardless of intent, is an offense.
Not only that, but the act specifically states that advertisements must not contain the expression 'loan guaranteed', or anything similar, unless there are no conditions to the credit worthiness of the borrower. So any dealer or broker promoting ‘guaranteed’ car finance is likely to be in breach of all three principles.
The consequences can range from a slap on the wrist to a full Financial Conduct Authority (FCA) investigation, with subsequent enforcement action. This action can be taken against the broker or dealer and also against senior executives, who themselves have a legal responsibility to ensure their business is compliant.
Given the FCA's focus on Treating Customers Fairly (TCF), the promotion of guaranteed car finance shouldn't be happening. However, considering that around 60,000 companies fall within the FCA's jurisdiction, policing them all must be a mammoth task and it's conceivable that some will slip through the net. Proof of this can be found by simply browsing dealer and broker websites.
Adding further insult to injury are those online brokers who not only claim to guarantee a car on finance, but charge an application fee ranging between £35 and £299 for the privilege. Yet even after paying this fee, you aren't necessarily guaranteed an offer of finance. Even if you are, the rates can be high and you may even be expected to find a guarantor.
That said, some of these brokers do offer a money back guarantee when it comes to the application fee. However, this guarantee is often bound so tightly in terms and conditions that you’d need to be a legal genius to navigate your way to an actual refund.
As you’d expect, ours is an ethical approach to providing car finance and we’re unable to guarantee an acceptance. However, through our highly trained in-house team and large panel of mainstream and alternative lenders, we can offer a two-out-of-three approval rate. We never ask you to pay an application fee either.
What’s more, we specialise in assisting applicants who’ve had trouble obtaining finance elsewhere, in particular those who have a history of adverse credit. So even if you have one or more defaults, CCJs, or an expired bankruptcy, we may still be able to help you fund the purchase of a new or used car (see: How we approach bad credit).
For the purpose of this promotion Stoneacre is not acting as a lender but as an independent credit broker working with a panel of lenders. A list of these lenders is available upon request. Stoneacre do not charge a fee for an introduction to a finance provider, however, we may or may not receive a commission.
Decidebloom Ltd t/a Stoneacre, Omega Boulevard, Capitol Park, Thorne, DN8 5TX, is authorised and regulated by the Financial Conduct Authority. Our FCA number is 308726. You can verify this by visiting the FCA website or by contacting the FCA on 0854 606 9966.
Sasha McCormack is a Sales Manager at Stoneacre Motor Group
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