Discretionary Commission Arrangements - Complaints and Refunds
You do not need to use a Claims Management Company. You can make the claim directly to the lender and if they reject your complaint you can take it to the Financial Ombudsman Service free of charge, but you must do this within 6 months of the lenders Final Decision Letter.
GO CAR CREDIT – COMPLAINTS & REFUNDS
Go Car Credit, based in Warrington, is a direct lender and has been around since 2017. They have, according to their website, approved over 117,000 loans for consumers looking to finance their next vehicle by Hire Purchase (HP). They are one of the go-to lenders if you have been refused a car loan by other lenders, due to perhaps a bad credit score and/or history, having to include your benefits as an income when you applied, being unemployed or being unable to put down a deposit.
Go Car Credit offer car finance from £3000 to £15,000 over a maximum repayment term of five years (60 months). They use “black box” technology (more about that below) to help get their customers “back on the road to better credit”.
As Go Car Credit offer finance to those whom other more traditional/mainstream lenders would deem high risk, it is plain to see that this is reflected in their painfully high charges and interest rates, and they make no apology for this – they may as well be saying “beggars can’t be choosers”! This is their representative example:
Total amount of credit = £8000 over 48 months - annual interest rate 20%(fixed), charge for credit £6711.44 (6404.44 interest, £295 admin fee and £10 option to purchase fee). 47 payments of £306.28 and one final payment of £316.28. Representative APR 39.7 (subject to status and affordability).
Go Car Credit claim that, up to September 2021, from when they were founded, they have helped over 19,000 people to get car finance who may have been refused elsewhere. Those 19,000 customers would have had to fulfil the following criteria:
UK resident for at least 3 years (and sorry Northern Ireland, you cannot apply) and over 18.
Full UK Driving Licence.
Monthly income of over £1250 and paid directly into a UK bank account.
Provision of 2 months consecutive bank statements (3 months if self-employed).
Not in an active bankruptcy or debt relief order.
More about Car Finance.
Car Finance is a multi-billion-pound industry; recent figures from the Finance & Leasing Association show that its members provided £37 billions worth of new consumer vehicle finance deals in the UK in 2021 (for both new and used cars).
As a new car will often cost thousands of pounds, and most of us cannot afford to pay this in one go, car finance is a way of obtaining those 4 wheels straight away without having to wait. Car finance is one way to spread the cost of a vehicle over several months or years.
Briefly, there are four main ways to finance your new car:
Personal Loan. This is just regular instalment loan that may, or may not, be linked to the car purchase. An instalment loan will typically be the purchase price of the car, plus interest, divided over the number of repayment months. You own the car from the beginning of the agreement, and you can change the car or sell it during the loan policy.
Personal Contract Purchase (PCP). This is the most common type of car finance. PCP is effectively a loan to help you get a car. But unlike a normal loan, you don’t borrow the full price of the car, and you won't own it at the end of the deal (unless you choose to pay a much larger final payment – called a balloon payment). You pay a deposit (usually at least 10% of the car’s value), then make a set number of monthly repayments. The repayments are based on the price of the car, the APR (interest rate) and the expected depreciation (the amount the car’s value is expected to drop by over the course of the loan).
Personal Contract Hire (PCH). PCH is more generally known as leasing and is not dissimilar to renting a car. You pay a deposit (usually the equivalent of three to six times the monthly repayment), pay an agreed amount per month, and get use of the car for the duration of the loan/term. Most car leasing contracts are for two to five years, and typically, the longer the agreement, the lower the monthly repayments.
The significant difference between PCH and PCP is that with PCH you do not have the option to buy the car at the end of the contract.
Hire purchase (HP). Hire Purchase agreements are relatively uncomplicated. This is where you pay off the value of the car, plus interest in monthly instalments over a fixed term (you do pay a deposit, again, usually at least 10% of the car’s value). The loan is secured against the car, so you don’t own the vehicle until the last payment has been made.
More about Go Car Credit.
Go Car Credit claim that, unlike other lenders, they do not just look at the facts and figures (e.g., credit score/history, bank statements) when deciding whether to offer credit. They profess to instead base their decision on a “blend of science and human judgement” to decide on affordability. Given the number of complaints that Go Car Credit (and other car finance lenders) have had levied against them, perhaps this method of decision making doesn’t work! I believe credit histories and bank statements are far more indicative of a person’s ability to pay back any finance than anything else. Cynically, one might think that Go Car Credit use this “human” element to get around the issue that the facts and figures scream “do not lend, they can’t afford it!”; Go Car Credit charge such high interest rates that it’s probably worth them taking a punt – after all, they are not going to be the ones with debt up to their ears, and that debt increasing rapidly, and of course, if repayments are not made on time or at all, they can repossess the car!
Problems and Complaints with Go Car Credit
The main and most common complaint about Go Car Credit finance is the mis-selling of the deal and its unaffordability, which I will go in to in a bit more detail later on. Other problems that customers have told us about are issues with Go Car Credit’s black box. Go Car Credit offer “black box car finance” as an option if a customer has struggled to get car finance due to bad credit. They claim that, with its “handy built-in payment reminders”, having a black box may put you on the road to rebuilding your credit score. These are not the black boxes that are installed by insurers to allow monitoring of speed, braking etc, typically favoured by new drivers as they can reduce their premiums. No, these little black boxes are Payment Reminder Systems, and apparently you are more likely to be offered finance if you agree to have one installed. Once a month, when a repayment has been received, a code is sent directly to the device, and this allows you to keep driving your car until the next payment. If, however, you fail to make a payment, the black box can immobilise the car. Go Car Credit do claim that they contact the customer before they immobilise the vehicle, but we have seen several complaints where this is not the case and have also seen complaints where payment has been made and the car is immobilised anyway (by accident).
Another complaint that crops up frequently is that the chosen car is faulty, and usually this is evident very soon after the car has been picked up by the customer, despite Go Car Credit stating that the car will be roadworthy and will have passed its “110-point check”, have a valid MOT etc, which of course you would expect! Many customers have complained that, once you have been accepted for finance, you then find out that you cannot just choose a car from any dealer, but only from selected dealers/companies. One of these is World of Cars. Which is a trading name of Go Car Credit. Yep, Go Car Credit direct its customers to its own dealership. Interesting. Unfortunately, it appears that a lot of the complaints about cars being unroadworthy/faulty etc, are the ones sold by World of Cars; allegedly, cars are being picked up by customers who then find that after driving them for a short period, faults such as water leaks or broken exhausts mainifest. Some customers believe that the MOTs are “dodgy”, as is the “110-point check”. Tied in with the faulty car issue soon after driving it away from the dealership, is the issue surrounding the “right to reject “period of 14 days. It appears that if a customer contacts Go Car Credit to complain about a fairly major fault within the 14 days, and they want to reject it, they are persuaded to let Go Car Credit sort it out; them, when Go Car Credit do not sort it out, the right to reject period has ended, and they are stuck with the faulty car.
Another common complaint, and one that has seen refunds be given to unsuspecting customers who complained, is that they were not made aware of certain criteria that had to be met regarding the finance when they signed on the dotted line. For example, there are maximum mileage restrictions and maximum age of vehicle restrictions, along with information about charges for any damage, that many customers have said they just were not told about, or if they were, not in a way that they understood.
Car Finance and the FCA (Financial Conduct Authority)
The FCA have stated that their main concern is the way finance companies pay commission to dealer and brokers, which, incredibly, rewards them for charging higher interest rates to customers! They found that car finance companies were inclined to use reward models that link commission payments to interest rates and amounts borrowed, rather than a flat rate of commission for selling the finance. So, to put it bluntly, the more money you borrow, the more commission the dealer earns, and the higher interest rate you pay, the more commission the dealer earns. It is not hard to see how this inevitably leads to a conflict of interest where a dealer will encourage a buyer to borrow more money for a more expensive car, or even to put in less cash upfront deposit wise and borrow a higher amount; both would mean that the dealer profited from larger commission payments.
Car Finance Mis-selling Checklist
You may have been mis-sold car finance and entitled to a refund if:
Companies like Redbridge Finance, who have helped many customers who feel that they were mis-sold vehicle finance, have seen complaints from people who had active payday loans, or a gambling addiction (which was completely obvious from itemised bank statements), and yet have still been given finance, when it was evident that this finance was just not affordable. If you feel that you may have been mis-sold a Car Finance loan from Go Car Credit or any other vehicle finance company, then Redbridge Finance may be able to help. We can investigate the thoroughness of checks, or as the Financial Ombudsman Service puts it, “reasonable and proportionate checks”, to ensure that you were able to make the repayments for the whole duration of the loan. We can represent you and your claim that you were unable to afford the loan and if we do not agree with the lender’s decision (this being a “no” to a refund or compensation, or an offer that we feel is too small), we will then pass your case on to the Financial Ombudsman. Even if you have paid off your car finance loan, you can still make a complaint if any of the above criteria applies to you and the loan you were sold.
*These complaints may take many months. You will have to keep up the loan repayments during this time, or your car may be repossessed. *
If you have had problems paying your loan, or you think you have been mis-sold a loan, then you could be entitled to a refund and/or compensation. Equally, if you feel that you have been treated unfairly, for example if your financial circumstances changed and Go Car Credit did not try to help you in any way, contact Redbridge Finance today by going to www.redbridgefinance.co.uk, sign up, and we can assess if you have a claim.