MotoNovo Finance has called on the motor industry to make a stand against what it sees as misleading stories focusing upon dealer finance following coverage of a survey compiled by Confused.com.
The Daily Mail published a story detailing what it saw as evidence of a “£1.4 billion a year rip-off” following the publication of a survey of 100 used car dealers by the online comparison website.
The headline figure was based upon an average 9.4% APR finance rate Confused.com that the article claimed was “almost three times higher than the 3.2% best price widely available online”.
But MotoNovo has claimed that the 3.2% APR rate claim is “potentially misleading, being highly selective and based upon the ‘low APR example’ of a three-tier Representative APR table on their website” – the other tiers being ‘moderate’ and ‘high’.
At best, this APR structure stretches compliance requirements, said a statement from MotoNovo, which added: “The more obviously typical ‘moderate’ interest rate on a £10,000 loan over 48 month is a Typical APR of 12.1% - almost a third more expensive than the dealers criticised.”
MotoNovo’s motor division chief executive, Karl Werner (pictured), said: “The Confused.com campaign may position itself as championing the consumer, but the reality, based upon the median APR banding available for customers will be very different.
“It seems disingenuous for Confused.com to criticise the motor industry for what it feels are high finance APRs when the typical customer, based on Confused.com’s online calculator, will often be charged a higher rate with them and not benefit from the higher level of consumer protection available on secured dealer finance.”
“I am happy to welcome competition, but the facts are that secured dealer finance: offers a higher level of consumer protection; provides acceptance rates that are commonly far higher than unsecured loans; and does offer competitive rates.
“Dealers need to be competitive and based upon the median picture from Confused.com’s article and website, they can be confident that the average 9.4% APR available on a used car certainly delivers this.”
A spokesman for Confused.com said that the business stood by the results of its mystery shopping exercise into car finance.
He added: “The exercise mimicked the typical journey a customer might make to find the best representative rate you would be offered if you were to walk into any dealership. These figures were then compared to the cheapest exact APR rate you could find on Confused.com.
“The fact that the service uses exact APR is key to the offering – it removes doubts about the rate you would pay from the word go, which will mean people are making a fully informed decision rather than seeing headline representative rates that could end up far higher in reality.
“We aren’t suggesting that consumers should never take out finance from dealerships, but the potential difference in repayments illustrates the value of shopping around.
“If finance companies and dealerships really do have the interests of consumers at heart, they will agree that the launch of a comparison service can only be a good thing for the market.”