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|Amount to Finance||£7,000|
|Total Amount Payable||£9,289.20|
Guaranteed car finance is a highly contentious subject, it is widely promoted by car dealers and online brokers, yet 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, upon which the 'guarantee' fails to materialize and a significant number of applications are subsequently declined.
In short, yes. For a start, dealers and brokers don't actually get the final say on whether or not a customer is approved for car finance. Naturally, lenders themselves have control over who they do and do not lend their money to.
These decisions are based around a complex set of criteria, something that's often referred to as a scorecard. After all, lenders want to be sure that the people they lend their money to are 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. This is for the simple reason that you'd end up lending money to people who clearly aren't in a position to repay it and would therefore do little more than push people further into debt.
Subject to the 2010 consumer credit (advertisements) act, 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 any similar expression unless there are no conditions as to the credit worthiness of the borrower. Any dealer or broker promoting guaranteed car finance is therefore likely to be in breach of all three principles.
The consequences for which can range from a slap on the wrist, or at the other end of the scale, a Financial Conduct Authority (FCA) investigation with subsequent enforcement action. Action that can not only be taken against the broker or dealer, but also 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, taking into account the vast array of companies that fall within the FCA's reach, some 60,000 to be precise, and the mammoth task that policing them all must be, it's conceivable that some will slip through the net. It's something that can be evidenced by simply browsing dealer and broker websites.
Adding further insult to injury are a number of online brokers who not only claim to guarantee a car on finance, but charge an application fee for the privilege. Amounting to anything from £35 right up to £299, the cold hard reality is that even after paying this fee, you aren't necessarily going to be offered finance and even if you are, the rates can be high and you may even be expected to find a guarantor.
That said, some such 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 would have to be a legal genius in order to navigate your way to an actual refund.
At Stoneacre, we take an ethical approach to the way in which we provide car finance and therefore can't 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 and don't charge any application fees.
Furthermore, we specialise in assisting applicants who have had trouble obtaining finance elsewhere and in particular those who have a history of adverse credit. Essentially, this means that even if you have one or more defaults, CCJs or an expired bankruptcy, we may 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.
Sasha McCormack is a Sales Manager at Stoneacre Motor Group
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