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There was a programme on the BBC on Thursday 25^th November called Rip-off Britain. In the first part a couple bought a used car that broke down within a few miles of driving it off the forecourt. This is clearly wrong and the buyer was entitled to his money back but it seemed that lack of assistance from Trading Standards meant that the buyer accepted what the dealer said and sold the car on at a loss. It’s a disgrace. The RMIF representative stated that there are 9 million used cars changing hands each year so it makes the 38,000 complaints received by the OFT in the first 6 months of this year look rather small. No, they are wrong, first of all if you are going to go on National TV and spout figures then one would expect them to get it right. There were 6.3 million used cars changing hands last year and of course many of those would have been sold privately and not through dealers. On the other hand 38,000 complaints will just be the tip of the iceberg. Many people won’t complain so these are just the complaints that have been made by people that understand that it’s possible to make a complaint to the OFT – what an arrogant man. This was followed later by a finance problem whereby a car buyer had been given a flat rate on HP finance believing it to be the APR, which it isn’t. I won’t bore you with the mass of inaccuracies in the report from so called experts but the BBC should approach people that know what they’re talking about. The RMIF representative, Paul Williams, said that by law the contract had to state the flat rate and the APR – WRONG, it’s only obliged to give the APR. The APR is a nonsense figure anyway as readers of my book will find out in one of my future videos, it’s all down to what you can afford to pay. Another so called expert, Ed Bowsher of lovemoney.com tried to explain flat rate by saying that you paid the same amount of interest every year, this was repeated by Angela Rippon when she stated that you are paying the same amount of interest in the last year as in the first year – sorry Angela but you’ve been fed some duff information there. That is the way the amount of interest is calculated but it certainly isn’t the way the loan works, it operates in exactly the same way as all loans, early payments contain more interest than capital repayment, this ratio changes following each payment – incredibly misleading, what is wrong with these people? So called experts – idiots more like! Oh and there was another issue, the gentleman that had been given the flat rate by the dealer, believing that the rate was the APR, was told he couldn’t have his deposit back as it was a separate transaction but was welcome to find finance elsewhere. The customer quite rightly claimed that he would report them to the Financial Ombudsman Service, after which the dealer suggested that he would reduce the APR down from 20.9% to 15.9% which the customer was happy to accept. EXCUSE ME? An APR on the cost of the car, £10,000, over 3 years at 7% flat calculates out at 13.6% APR. We don’t know what the charges were but even if you allow for an arrangement fee of £230 and a final option to purchase fee of £75 this still means that he was paying the equivalent to 7% flat – you were had over my friend! In my opinion the original 20.9% APR was no way a flat rate of 7%. You can check using this great resource:

http://www.prudentminds.com/apr-calculator.html

Now let me move on to the fact they refused to refund his deposit, again totally wrong. As both the finance and the car purchase were arranged at the same time with the dealer it is what is known as a linked transaction. So by misleading the gentleman, Dan Stringer, he could exclude himself from the whole transaction, in fact he doesn’t need to have a reason if the finance contract hasn’t been executed (both parties signed) as shown in the statement below:

It is important to note however, that with all agreements, the customer may withdraw from the prospective agreement at any time before it is “executed” i.e. completed. This has the same effect as cancellation. Any “linked transaction” such as the purchase of a car, is also cancelled and the customer and trader should revert to square one with any deposit or part exchange being returned.

In addition Dan paid the deposit by credit card so under section 75 of the Consumer Credit Act he could have brought the credit card company into the argument and claimed the refund from them. I think the BBC need my help! If you want to watch the episode click here:  http://www.bbc.co.uk/iplayer/episode/b00wckck/Rip_Off_Britain_Series_2_Episode_4/

By Graham Hill