Motor Finance: Protecting Yourself When Buying Your Next Vehicle

When buying a car, especially through dealership-arranged finance, many consumers may have assumed that the dealership is there to find the “best deal” for them.

The recent Supreme Court motor finance ruling made it clear that this is not the case — and understanding why could save you thousands.

What the Supreme Court Said About Dealerships

In its landmark decision, the Supreme Court accepted that dealerships arranging finance are not impartial.

Dealerships have now admitted that they act only in their own commercial interest, aiming to secure a profitable sale of the vehicle, and an additional income through commission from the finance provider.

This reinforces a widely considered opinion of car salespeople.

The Role of Commission in Motor Finance

When you take finance through a dealership, the finance provider generally pays the dealer a commission. These commission deals could have been:

• A A flat fee for each finance agreement
• A A percentage of the amount financed
• A volume fee if it hits a certain target
• A loyalty fee for giving first refusal to a finance company
• A rate-linked commission (where the dealer earns more, they higher the interest rate it gets you to sign up to)

Historically, the amount of these commissions were never disclosed, and in many cases these figures can be substantial.

This issue is that these commissions were ultimately paid for by consumers via the interest paid on their finance agreement.

Why Full Disclosure Matters

The Supreme Court’s acceptance of the dealer’s self-interest makes one thing clear: you must protect your own interests. That means demanding transparency.

When arranging finance in future, you should:

1. Ask the dealer to disclose in writing:
   • Whether they will receive a commission from the finance provider.
   • Exactly how much that commission will be in pounds and pence.
2. Request that the commission amount be deducted from the sale price of the vehicle or request that the commission be removed.

If the dealer refuses, walk away — and don’t be afraid to shop around for finance independently.

Practical Steps Before You Sign Anything

• Try to obtain a personal loan, or a motor finance loan independently — this gives you a benchmark to compare.
• Ask for the APR and total cost of credit in writing before committing.
• Insist on commission disclosure — and keep a record of your request and the response.
• Don’t rush. A “today only” deal often benefits the dealer more than you.

The Bottom Line

The Supreme Court has confirmed what many already suspected: when it comes to finance, dealerships work for themselves, not for you.

By being proactive — asking the right questions and insisting on commission transparency — you can take control of your car purchase, reduce the risk of overpaying, and make sure your money works for you, not for the dealership.