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Times
5 hours ago
- Automotive
- Times
Scammers offering fake compensation for car loans
A planned compensation scheme for millions of people who were mis-sold car loans has been leapt upon by fraudsters, the City regulator has warned. The Financial Conduct Authority (FCA) said scammers were calling people and offering 'fake compensation in exchange for personal details such as their name, address, date of birth and bank information'. Millions of consumers who bought cars with motor finance could be entitled to payouts of almost £950 after the regulator said this month that it would consult on creating a redress scheme that could cost lenders between £9 billion and £18 billion, a figure substantially lower than had been feared by the motor finance industry, but which would still represent one of the largest UK compensation exercises. The regulator noted that the redress scheme was not yet in place and that lenders were not contacting customers yet. It said that people receiving calls about compensation should hang up. In 2021 the FCA banned car dealers from adjusting the rate of interest they offered to buyers in return for higher commission from car finance firms. It had wanted to start a compensation scheme but put this on hold while cases brought by individuals went through the courts. Eventually the Court of Appeal backed consumers, prompting speculation that the industry was facing a bill of up to £40 billion. The Supreme Court overturned central elements of the earlier judgment, however, in a victory for the motor finance industry. The authority is consulting on a compensation scheme in the context of the Supreme Court judgment. The regulator's guidance that payouts are likely to be less than £950 per car finance loan and that they do not need to use a claims management company has been a blow to the claims industry, which had told people that claims could be in the order of £4,000. • The obscure firms behind frenzy in car loan claims Members of the House of Lords have urged the FCA to further reduce the scope of compensation by rethinking its plan for the redress scheme to cover loans written as far back as 2007. The House of Lords financial regulation committee has said that a 'more appropriate' timeframe for the scheme could align with a six-year deadline for claims to be brought before a civil court. Nisha Arora, director of special projects at the FCA, said: 'We're aware of scammers calling people and posing as car finance lenders, offering fake compensation and asking for personal details. There is no compensation scheme in place yet. If anyone receives a call like this, hang up immediately and do not share any information.'
Yahoo
03-08-2025
- Automotive
- Yahoo
Car finance mis-selling payout scheme could be worth billions
A compensation scheme for drivers over the mis-selling of car loans could cost as much as £18bn, the financial regulator has said. The Supreme Court ruled on Friday that hidden commissions from lenders to dealers on car loans were not unlawful, meaning millions of motorists will not be able to claim. However, the judgement left open the possibility of compensation claims for particularly large commissions which the Supreme Court said were unfair. Following the ruling, the Financial Conduct Authority (FCA) has said it will run a payout scheme - estimated to cost between £9bn and £18bn. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
BBC News
03-08-2025
- Automotive
- BBC News
Car finance mis-selling payout scheme could be worth billions
A compensation scheme for drivers over the mis-selling of car loans could cost as much as £18bn, the financial regulator has Supreme Court ruled on Friday that hidden commissions from lenders to dealers on car loans were not unlawful, meaning millions of motorists will not be able to the judgement left open the possibility of compensation claims for particularly large commissions which the Supreme Court said were the ruling, the Financial Conduct Authority (FCA) has said it will run a payout scheme - estimated to cost between £9bn and £18bn.
Yahoo
13-07-2025
- Automotive
- Yahoo
Vincent Chan Reveals The Top Wealth Killer: 'It's So Normalized'
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Good money habits can help you build wealth, but a few bad ones can derail your progress. While it's easy to think of bad investments and impulsive spending as two factors that can kill wealth, financial guru Vincent Chan reveals the top wealth killer that affects most people. "It's so normalized," Chan stated when discussing this wealth killer. Chan is talking about taking out an auto loan to buy your car. He offers concrete numbers and examples that demonstrate how much money you end up losing due to these loans. These are some of the reasons why a car loan is a bad idea. Don't Miss: Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Here's , starting today. $100k+ in investable assets? – no cost, no obligation. Chan starts the video by mentioning that one of his friends took out a $55,000 car loan and ended up paying $70,000 for the vehicle. The loan had a 5-year term, and now that the loan has been paid off, the car is only worth $25,000. It's a $45,000 loss that will get worse over time. The car model will continue to get older, and it will need maintenance and repairs along the way. Many people fall for the trap of buying a new car with a loan, but for many people, it's also a necessary evil. Not everyone has $55,000 available to buy a new car, and car prices may continue to go up due to inflation and tariffs. However, a car doesn't benefit from inflation. While your house will likely gain value over time, your car is actively losing value. The sharpest price decline takes place the moment you drive your new car out of the dealership. Trending: The secret weapon in billionaire investor portfolios that you almost certainly don't own yet. Chan also mentions that the average car payment for a new vehicle comes to $742 per month. That's a sizable percentage of most people's salaries since the real median household income was $80,610 in 2023, according to the U.S. Census Bureau. That comes to $6,717.50 per month. The average car payment of $742 per month makes up 11% of the average American household's income. This average auto loan payment doesn't even represent the full cost of car ownership. You also have to pay for insurance, gas, maintenance, repairs, and other expenses. A high auto loan payment won't give most Americans flexibility with portfolio contributions. They also have to contend with housing costs, groceries, taxes, and healthcare. While you'll have to cover essential costs either way, going over-the-top with your auto loan will make it more difficult to build a nest insurance is one of the silent costs of owning a vehicle that adds up over time. Chan pulled up research that indicates full coverage car insurance policies cost an average of $2,680 per year. Premiums also fluctuate due to a car's model, age, and other factors. Chan suggests comparing car insurance policies each year to make sure you are getting the best deal. This strategy takes some time, but you can end up saving thousands of dollars over your lifetime by paying attention to your car insurance. He suggests comparison shopping every six to 12 months. A car is an essential resource for many people, especially individuals who live in rural and suburban communities. However, if you don't monitor your costs, those monthly car loan payments can eat up a large percentage of your monthly paycheck. Buying a used car can save you money and help you become debt-free sooner, and shopping around for the best insurance policy is also beneficial. Read Next: Over the last five years, the price of gold has increased by approximately 83% — Investors like Bill O'Reilly and Rudy Giuliani are . Image: Shutterstock This article Vincent Chan Reveals The Top Wealth Killer: 'It's So Normalized' originally appeared on Sign in to access your portfolio
Yahoo
07-07-2025
- Automotive
- Yahoo
Car buyers set a record with more than $1,000-a-month car payments in Q2
Car buyers nationally set a record in the second quarter as more opted for whoppingly long-term loans and monthly car payments that rivaled some monthly home mortgage bills. According to second-quarter data crunched by the share of new-vehicle buyers to commit to monthly payments of $1,000 or more hit an all-time high of 19.3%, or nearly 1 in 5 consumers. That's up from 17.8% in the year-ago quarter. The average monthly payment was $756, up $16 from a year earlier. Edmunds reported that car buyers are taking out longer-term loans to achieve palatable payments. In the quarter, 22.4% of new-vehicle financing were of loans 84 months or longer, a new record. In the second quarter last year, 84-month loans accounted for 17.6% of new-car financing. In metro Detroit, a Chevrolet and Ford dealer each reported monthly loan terms and payments are much lower here than Edmunds' national averages because of the popularity of leasing and employee discounts, both of which bring down monthly payments. But at Gordon Chevrolet, which owns a store in Garden City and Orange Park, Florida, dealer Adam Logemann said he is seeing more customers in Florida increasingly opt for longer, 72- to 84-month loans. Edmunds' Ivan Drury said it would be easy to assume that the 25% tariffs President Donald Trump put on imported vehicles are to blame. But the record-breaking trends are more reflective of consumers increasingly choosing the maxed-out loan term lengths despite vehicle prices remaining steady. 'It's clear that buyers are pulling the few levers they can control to manage affordability, whether that's by taking on longer loans, financing more or putting less money down — even if some of those decisions increase their total costs," said Drury, Edmunds' director of insights. Drury said the tariffs have not yet directly driven up second-quarter prices but, "they're certainly not going to make things any easier for shoppers moving forward.' Edmunds' data also showed that bigger loans are becoming the new normal with the average amount financed for new vehicles climbing to $42,388 in the quarter, again an all-time high, up from $40,873 in the year-ago quarter. In the quarter, the average new car loan term was 69.8 months with a 7.2% annual percentage rate, up from 69 months with a 7.3% APR a year ago. The average monthly payment was $756 compared with $740 a year ago. To make matters worse, 0% finance deals accounted for 0.9% of new-vehicle loans, the lowest share Edmunds has on record since 2004 and down from 2.9% a year ago. In case you missed it: Buying a new car? Why you might want to abide by the 20% rule If you think used vehicles are considerably less, think again. In the second quarter, the average loan length taken on a used car was 69.7 months, that's flat compared with the year-ago quarter. The average APR was 10.9%, down from 11.5% a year earlier. Yet the average monthly payment was $7 higher at $559 compared with a year earlier. That's because the average amount financed rose to $29,080 from $28,166 and the average down payment dropped to $4,092 from $4,140. Edmunds said new-vehicle buyers, like used-car shoppers, put less money down in the quarter. Edmunds' data showed the average down payment for new car purchases in the quarter was $6,433 compared with $6,579 a year earlier. While extended loan terms may offer easier monthly payments, Edmunds analysts caution there could carry long-term consequences. 'Consumers need to keep in mind the risks associated with a loan extended that far into the future, including increased costs for upkeep down the line and the risk of being underwater on the loan if the car is traded in before it's paid off,' said Joseph Yoon, Edmunds' consumer insights analyst. 'If payments on a more standard 60- or 72-month loan don't fit your budget, you might consider leasing." Yoon said even though a lease does not allow a buyer to build equity in the vehicle the way a purchase does, it gives a buyer time to get their finances in better shape with lower monthly payments. At Village Ford, owner Jim Seavitt offers 84-month loan terms, but he does not encourage customers to take it if possible. He said about 10% of his 170 new car sales each month are for 84-month-long loans and he hopes to keep that rate low. About 5% of his sales result in monthly car payments of $1,000 or more a month, but those are usually for high-end Ford Expedition SUVs or F-Series pickups. In June, he said, just four sales resulted in $1,000 monthly car payments. Logemann, dealer principal at Gordon Chevrolet in Garden City and Gordon Chevrolet in Florida, said because so many car buyers lease new vehicles in Detroit and there are a lot of Detroit Three automaker employees buying cars there, Detroit tends to have lower monthly payments than other parts of the country. But at the store in Florida, he said the monthly car payments are noticeably higher and more customers are extending the loan terms to get their payment down. "We are seeing more 84-month loans than we have historically. Most people are looking in that 72- to 84-month loan term," Logemann told the Detroit Free Press, part of the USA TODAY Network. "Part of it is to lower the monthly payment. The other part is that the quality of the vehicles is much higher, so the ownership time horizon for the customer might be a little longer now because they have confidence in the car." Customers still come to the table with adequate down payments, he said, noting: "The two big things we do in our lives is we buy a house and we buy a car. I still see people saving for those items." If the customer is going to own the vehicle for an extended-term loan, Logemann said it's more important than ever that dealers provide a customer with a "top-level experience" so that they return for service during those years. Logemann said despite broad uncertainty around tariffs and the economy, both of his stores had "solid" vehicle sales in the quarter and strong revenue in the service lane, prompting him to add, "The consumer, at this point, is fairly healthy." Jamie L. LaReau is the senior autos writer who covers Ford Motor Co. for the Detroit Free Press. Contact Jamie at jlareau@ Follow her on Twitter @jlareauan. To sign up for our autos newsletter. Become a subscriber. This article originally appeared on Detroit Free Press: Car loan monthly payments hit record for buyers at $1,000 or more
