How much mileage can I get out of this?
As most of you will be aware, the last few weeks have really seen the profile of our industry go through the roof
While the old adage is ‘any press is good press,’ I’m sure more than one reader winced at some of the headlines coming out of The Times, The Guardian, The Telegraph and so on. While they all varied in detail, the vast majority of them portrayed motor finance in a negative light.
Some of the claims range from unfair to inaccurate (yes, lenders do conduct affordability checks; no PCP isn’t available in the subprime, despite what you might have read elsewhere), but some charges do require further probing and questioning.
One area which I think really needs looking at is the role the dealer plays in the sale, as it is so important yet is outside of the control of the lender.
The other day, I was listening to Radio 4, to hear Adrian Dally defend the industry on Money Box. On the show one of the customers complained that her PCP agreement had a mileage limit of 6,000 miles, something she described as ‘incredibly low,’ and that she’d done 15,000 miles instead, leaving her with a hefty fine at the end of the agreement.
According to the BBC she said she wasn’t told about this mileage limitation at the dealership, even though the mileage limits and charge were in the contract.
This raises a couple of troubling questions: Was she expressly told about the mileage limit? Considering the extent she went over it, was there a conversation to establish an appropriate allowance?
Judging mileage can be a hard question. Too high, and the customer will end up with a more expensive deal, which is not good for them, and could potentially lose the dealer their sale. Too low, and there is a risk the customer could have the same experience as the person on Money Box.
One thing should be obvious, from a consumer and a lender point of view, reducing mileage just to try and get the monthly payments down isn’t smart in the long run. The problem is a lot of these conversations happen between the consumer and the dealer, not the consumer and the lender.
For this reason it’s important to ensure dealers aren’t lowering the amount of mileage a customer applies for when looking for a PCP deal to bring the price down. It might also be smart to keep a record of what is said, and ensure dealers are trained to have these types of discussions.
As a journalist who gets to spout lofty ideals with scant regard for the commercial realities of having agreements in place with hundreds or even thousands of sites, I’m aware there are limitations to what advice I can give before people start rolling their eyes.
Regardless, this is just a single point about the larger question of how well do you know your dealers.
I’m fairly confident in saying your average lender takes ‘TCF’ seriously, and that the same is true in the head office of large dealer groups. The key is to ensure all of this translates down to the man or woman in the showroom, selling customers cars, and who is paid commission on these sales.