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After a spate of adverts on the TV in which various lenders suggest that they can carry out a search to see if you are eligible for a loan, without leaving what is known as a ‘footprint’ on your credit file, many questions have been asked by customers and those on my blog regarding theses searches and their own credit files. In general they want to know how this can be done, are our searches recorded and what is the purpose of having searches registered on your credit file if some lenders are apparently ignoring the rules?

OK let me explain. First of all the rules are very clear, if you make an application to a lender for credit, which will cause a lender to access the information held on your credit file, they will register the search with the agency. More on this later. However, the rate you are charged for finance is often based on your credit status so to help the industry and avoid you suffering as a result of ‘shopping around’ a new search was introduced known as a ‘quotation search’.

This is different to a credit application search, known simply as a Credit Search. All Credit Searches are available to anyone who has access to your file after you have given them permission. But only you can see the ‘quotation searches’, none of these searches are available to lenders or anyone else accessing your credit information such as potential employers, association membership applications etc. Each of the three UK credit reference agencies, Equifax, Experian and Call Credit will list all ‘credit searches’ on your credit file once you have made an application for credit.

However, this encouragement to ‘shop around’ is promoted in the knowledge that whilst attempting to get to the best rate through lenders or brokers, your credit score won’t be penalised. That seems reasonable. However, lenders and credit card companies are using this loophole to drum up business. Now don’t misunderstand me, I’m not actually opposed to some form of pre qualification as it can save a lot of pain. If you are pre-qualified on the finance you will know, before you get excited over the new car you’ve chosen, if you will be offered the finance to acquire the car and the car salesman won’t waste time showing you cars that you can’t finance.

But it’s the abuse of the system that I, and many others, object to. There are some lenders and search agents that will offer to carry out a free credit search for you to see how your credit stacks up and your likelihood of receiving the loan you are thinking of applying for. But having carried out the search you are then inundated with offers of  ‘Pre-approved’ loans and credit cards. Not, in my opinion, in the spirit of the FCA regulations to treat customers fairly etc.

Anyway, let’s get back to the recorded searches and their affect on your credit. Different lenders have different attitudes towards the searches. If you have a number of credit searches on your file within a very short period of time, i.e. several over a few days they will approach your application with caution as it could be that you are applying for credit to many funders at the same time that could take you out of your affordability range.

Of course several searches could be the result of several applications being made around the same time. As the approval doesn’t get registered on your file, only the loan when you draw down the amount borrowed or, in the case of HP, when you take delivery of the car, the only way that lenders are aware of each other is via the searches. So whilst imperfect they can act as a warning.

For example, let’s say you have had agreed 5 different loans from different lenders, you could arrange draw down on the same day and only after that would each lender be aware of the other, so that’s why searches are important. To avoid the lender believing that you could be doing this make sure that if you are ‘playing the field’, when you ask for a quote the lender is only carrying out a quotation search. You should also be aware that when searches are registered they are only registered with the agency that the lender uses. In other words there is no sharing of information between credit reference agencies, so if the lender searches Experian the search will only be registered with them, not with Equifax or Call Credit.

Of course some of the larger lenders will search all three platforms, especially if the loan amount is substantial. When checking your own files, there are new agencies such as CheckMyFile who purport to check all the platforms for information on you but I’m unsure about the accuracy but in the meantime, because of the way the systems work you may find information on one platform about you that doesn’t appear on another. This is what one of the agencies said to me:

However, please know that the information held by xxxxxxxxx is dependent on what is shared with us by lenders. Not all lenders share account information with all credit referencing agencies, and so it’s possible that we may not hold any information at all about a particular account. This is why we recommend that you check your credit report with all three major credit referencing agencies, in order that you can get a complete view of the information held on you.

So much for the adverts on TV enticing you to check your credit score with them. If you are just going to check one it might be useful to know that 76% of lenders use Experian, 54% use Equifax and 30% use Call Credit. Why doesn’t this add up to 100%? Because some lenders search 2 or all three platforms. The Moneysavingexpert has helped out by listing the various lenders and which credit reference agencies they use. So if you are applying for say a credit card with the Co-op you will see that they only check Experian so that’s the one you need to check out. Here’s the link:

http://www.moneysavingexpert.com/credit-cards/credit-reference

There are no legal obligations applied to searches and the amount of time they should remain on your file but for information credit searches remain on your Experian and Eqifax files for 12 months whilst they remain on Call Credit for 2 years.

Oh and as a couple of final thoughts, firstly if you are looking to take out a loan, thanks to the EU Consumer Credit Directive of 2010 those advertising representative APR’S must be seen to provide 51% of all customers with the rate advertised. This changed from 66% under our own UK legislation so the EU has provided banks and other lenders a licence to print money. And to prove my point, in an advert on Barclay’s Bank website they advertise a personal loan of between £7,500 and £15,000 at an APR of 4.9% Representative over 2 – 5 years. It also says rates may differ with a tiny 3 attached to it. This is what tiny 3 says right at the bottom of the page:

3. The rate you’re offered may differ from the representative APR shown – and will be based on your personal circumstances, the loan amount and the repayment term. The Barclayloan advertised here is available over terms of between 2 to 5 years, with a maximum APR of 26.9%.

Wow, bit of a difference eh! And as they only need to provide the 4.9% APR rate to just 51% of the customers how many of the other 49% do you think are having to pay closer to 26.9% than the 4.9%? Hmmm!!

Secondly, and finally, there is confusion over your ability to obtain finance and your credit score. Having many credit searches on your file will, in many cases, drop your credit score slightly. So your score may drop from say 99 out of 100 to say 95. In some cases I’m told that your credit score won’t be affected at all but this doesn’t mean you can finance a new Ferrari on a take home pay of £2,000 per month.

And this is where the more important score comes into play, the underwriters ‘Score Card’. This score takes into account many other things such as where you live, what company you work for and the industry you’re in, how long you’ve been in your current job, number of dependents and of course your income along with many other factors, put together by each individual lender.

It is this scorecard that determines whether you will be advanced the money or not, not your credit score which is just part of the equation. By all means make sure that you look after your credit and maintain a high credit score but remember that a high credit score doesn’t mean auto accept on anything you want to finance.

Absolutely finally if you find that you have applied for credit at several dealerships over a few days then changed your mind, or applied online, not for a ‘quote’ but actually for the finance to several lenders, leaving a string of Credit Searches on your credit files, make sure that you explain what happened on each of the 3 credit agency files by posting a ‘Notice of Correction’.

Explain that you have been test driving cars and each time was talked into checking if you could be cleared on finance by their lender or if you have been applying for finance online and again not realised that search footprints, left behind, might affect your credit score, post a note to this affect. If you do this it forces an underwriter to check your file rather than rely upon the autoscore to either accept or reject your final application.

In fact the same applies if you have some negative activity on your file (defaults, arrears) as a result of say a marriage breakup or redundancy, you have 200 words to explain what happened and that you are now on top of things (if you are). It could certainly help your application if the problems took place some time ago, Just thought I would mention!

By Graham Hill

MOT tests do not prove that a car has no faults. On many occasions I have written about this issue and explained how buyers have been handed a brand new MOT certificate with their used car as proof that the car is faultless. Most safety items are checked along with emissions but it won’t reveal that a car has an oil leak or any other mechanical fault unless it falls within the scope of the test.

A full mechanical check on the car should confirm if the car has a faulty gearbox or engine or any other potentially expensive faults. Having said that the scope of the MOT test is extending annually to include new technology which also means that examiners are expected to take an annual, online, test. However, it has been revealed that just 35% of MOT testers have taken their test with just up to the end of March to pass.

Following which the testers will put their licence in jeopardy. The question is does this put drivers at risk if the MOT tester isn’t up to speed with the latest requirements? The Driver and Vehicle Standards Authority (DVSA) thinks not as they have announced that the examiners will be treated leniently this year, as this is the first year of change and the online examinations, but a tougher approach will be taken in future if examiners don’t conform to the new rules. Concerns have been raised regarding driverless cars.

Development in this sector is gaining traction but concerns have been expressed by various bodies regarding the preparation, or rather the lack of it, when it comes to the safety testing and MOT test criteria in relation to autonomous cars fitted with extra sensors and complex electronics. The Department for Transport simply says that work in this area is ‘under review’. Finally on the subject of MOT testing the Department for Transport has finally launched its proposals to extend the first MOT test from 3 years to 4 years.

The consultation paper recommends that the initial MOT test for cars and motorcycles be extended to 4 years from 2018 saving motorists more than £100 million annually. Transport Minister Andrew Jones (no I haven’t heard of him either) suggested that our roads are some of the safest in the world and vehicles are much safer than they were 50 years ago when the MOT test was set at 3 years.

Personally I would suggest that we need to see how many cars fail their first MOT at 3 years before deciding if we can extend to 4 years. Strange that wasn’t mentioned. By Graham Hill

As most of us know you can give the same set of statistics to two different people and they will each read something completely different into them. Let’s take the way you will finance your next car, assuming it’s a new car. Statistically around 87% of new cars financed by consumers were financed on a Personal Contract Purchase (PCP) with around 6% financed on Personal Contract Hire (PCH).

So you may draw from the statistics that by far the best product is PCP as 87% of the market can’t be wrong. Let me explain that PCP is the most popular amongst car dealers, that’s why it is the most popular amongst consumers – they’ve been sold to! And, as has been reported widely recently, there is a grave lack of education amongst consumers when it comes to financing one of their biggest financial commitments – their car.

PCP has replaced HP as the most popular way to finance your new car, let me explain why – it makes the lender and the dealer more money even when the most toxic measurement ever created, the APR, is exactly the same on the same car. At this point you may be aghast.

Let me give you a quick example, you see a car that costs £22,000, you put down a deposit of £2,000 and look to finance the car over 3 years with the intention of owning the car after 3 years and, if it is still OK, running it for maybe another 2 years. But currently the cash flow is a little tight so you need to look at the figures. Let’s look at HP based on 36 payments with you owning the car after 3 years. And to keep it simple we’ll work on an APR of 10% assuming also that there are no additional fees and charges.

The monthly figure calculates out to be £645 x 36 payments = £23,220. OK, now let’s look at a PCP with the loan amount being the same, £20,000, APR the same at 10% and a final payment of £10,000 to own the car, the monthly figure calculates out to £406 per month. Wow a monthly saving of nearly £240! But if you then pay the final figure and own the car in the same way that you owned the car at the end of the HP agreement you pay 36 x £406 = £14,616 + final payment of £10,000 = £24,616, a whopping £1,396 more in interest charges.

You can answer the question yourself – which product do you think the lenders and more importantly the dealers want to push you into? You may be paying substantially less per month and the same APR but the extra interest represents an extra 7% on the amount financed. But now let’s look at a headline, ‘Personal Contract Hire (PCH) is the fastest growing method used by consumers to finance new cars.’ Sub heading: ‘The take up of PCH has more than doubled over the last 18 months’.

Yes it has, 18 months ago it only accounted for 2.5% of the finance used by consumers to finance new cars it is now at 6% and growing so you could conclude from the headlines that PCH is the way to go. But you are unlikely to  see these headlines as dealers don’t like PCH as they have to sell their cars at rock bottom prices with some leasing companies restricting their finance commission to just £200 per car.

So you won’t see dealers falling over themselves to sell you a PCH on a car, even though it may be substantially cheaper than a PCP, but rather selling you into the idea that you could own the car at the end of a PCP, something you are not legally entitled to do at the end of a PCH (although some leasing companies will sell you a car at the end of a PCH at trade value if asked).

In truth only 20% of those who take a PCP actually buy the car at the end of the agreement with most of those using the car as a part exchange as there is some equity in it so the idea of owning the car at the end of the agreement as important is in fact a nonsense – the stats prove it! Finally, in an even more favourable twist in favour of consumers, many fleet operators are complaining that consumers are sometimes being provided with better deals than they are.

That is because the manufacturer and dealer can give away up to 45% in combined discount and bonuses on stock that needs to move to make way for new models, to keep production lines moving, or as a PR exercise to get more brand awareness out there. The problem with this is that when the cars go or they hit their target the deal disappears with monthly rates increasing by as much as £200 + VAT per month.

On the other hand fleets don’t want huge fluctuations in rates, it throws their budgets out. A fleet may have negotiated a deal on Golfs at £200 + VAT per month only to see a batch being offered at £169 + VAT to consumers. However, after the promotion, it wouldn’t be unusual for the consumer rate to jump to £269 + VAT but whilst the deal lasts the consumer has had a bloody good deal! By Graham Hill

Contract Hire or car leasing as some people call it can be very confusing because you can’t always apply what you may consider to be logic. Let’s take metallic paint for example. Some leasing companies will provide you with free metallic paint and given the fact that metallic for most cars costs north of five hundred quid you’d be silly not to take it. But are they actually being generous?

No they’re not because careful scrutiny of some quotes that I run shows that the addition of metallic paint, whilst increasing the cost of the car actually drops the monthly rate. A recent BMW quote dropped the rate by £6 + VAT per month when I added metallic paint.

This may sound daft but it’s all down to the resale value at the end of the agreement. A prestige car with metallic paint is much more desirable in the used market than a solid colour car and this is often reflected in the prices achieved through auction. So from the leasing company’s point of view, whilst they may have to pay an extra £400 for metallic after discount they could be £7-800 better off when they sell the car in 3 years time.

The same can apply to the spec. of the car. We have had a number of deals over the last few months where a better spec car can be leased for less than an entry level car. This can be partly because some extra discount has been given by the manufacturer but is often because of the desirability of the car through auction.

Some examples are the Jaguar XF where the R-Sport was less per month than the SE and the Jeep Renegade Sport was more expensive than the better spec. Longitude. So don’t dismiss the higher spec. because you think that the higher spec. car will cost a lot more per month because the list price of the car is much more.

The VW Touareg R-Line is £377.45 + VAT per month and the R-Line Plus is just £3 + VAT per month more at £380.54 + VAT and yet the spec. is much improved. Contract hire is a product that often defies logic – speak to me! By Graham Hill

Following on from my note explaining that Mayor Khan is trying to reduce the number of diesels driving into central London, the London Assembly is calling on Mayor Khan to do more about the daily gridlock. It is suggesting that they need to replace the daily congestion charge with a road pricing scheme.

It currently costs £11.50 per day to drive around the congestion zone area which would be replaced by charges relating to the amount of time spent in the restricted area. Subject to consultations this new scheme could be introduced as soon as 2018.

According to the Assembly traffic delays costs London’s economy £5.5 billion in 2015/16 which represents an increase of 30% compared to 2012/13. Can’t for the life of me see how they arrive at such a figure. The Assembly pointed to a similar scheme operated in Stockholm whereby you pay between £1-£3 each time you cross in or out of a central zone, with the charges increasing at peak times.

The result was a drop in traffic by 22%. The proposal is that they consider a similar scheme but also include an allowance for emissions and adjust the rates accordingly. Before you start writing into Mayor Khan there are discounts and exemptions which the Assembly intends to keep but with no plans to extend further.

If you’re a Londoner I guess you must hope that Mayor Khan doesn’t have another Trump moment and apply the new rules by the end of February! By Graham Hill

There are a great number of misunderstandings when it comes to resolving problems with garages and dealerships. You can avoid the costs of a court case by turning to an Alternative Dispute Resolution company, recommended by the Government as a way to stop courts from getting clogged up.

If you have a dispute with a dealer that you cannot resolve between yourselves you can refer your complaint to an ADR company. In fact the dealer must suggest an ADR company if they are part of a trade body. If they aren’t part of a trade body the dealer must point you in the direction of ADR but they do not have to adhere to the recommendations of the ADR company, which kinda makes the whole process a bit of a nonsense.

If they are part of a trade body the dealer must be signed up to a code of practice against which their performance is judged. I have my reservations regarding this practice, especially as the courts themselves can encourage you to go through a court appointed ADR company in order to avoid taking up court time and the possibility of you carrying the costs if your court case fails.

I just feel that a court appointed ADR service would carry more weight than an independent working with the dealership’s trade body. Time will tell if my reservations were justified. By Graham Hill

One of the great things about new cars is the quietness of them. Improved car design reduces wind resistance and wind noise. Drive a diesel car and you could be mistaken into believing that diesel engines no longer rattle, they do, but because the soundproofing is of such a high standard now, you can hardly hear the engine from inside the car.

Tyre compounds and new suspension systems reduce road noise dramatically and of course hybrids and full electric vehicles are as quiet as a mouse when operating in electric mode. The problem is that many of the changes have come about very quickly so when a driver moves from a 3 year old car to a new car the noise level drops so significantly that he or she loses all perception of speed.

The main indicators such as engine noise, road and wind noise have been all but eliminated in some cars so the fear of many safety experts is that we will see a significant increase in accidents and/or speeding tickets as a result of speeding. Having read about the latest Tesla challenging Faraday Future FF91 capable of developing over 1000 bhp out of its electric engine taking it from 0 – 60 in 2.39 seconds without making a noise, I’m very worried.

Even petrol and diesel engine’d cars pose a threat to safety. So if I or anyone else has convinced you to ditch your 5 year old car for a brand new model make sure that you acclimatise yourself to the noise levels before you start ‘opening her up’ on an A road or motorway. You don’t want to be writing your new car and/or you off in the first few weeks of taking delivery! By Graham Hill

Over the near 30 years that I have been in this industry I have seen and done many things, seen some of the most crooked activities carried out by dealers, brokers and car supermarkets, amongst others, as well as fraudulent attempts to acquire cars by crooked customers.

For many years I was an expert witness for the Crown Prosecution Service in cases of vehicle and asset finance fraud so I’ve seen most things crooked that go on in the automotive industry, some of them revolving around so called pre-registered cars and ex demonstrators.

Whilst I won’t bore you with all the fraudulent things I’ve witnessed, you’ll have to buy my upcoming book for that, I’ll share a couple of things with you as I’ve had a couple of potential clients who have recently avoided contract hiring a new car in favour of a so called pre-registered car or an ex demonstrator on HP or PCP.

First of all I should point out that it is possible to get a good deal on an ex demonstrator but it’s the luck of the draw and I’ll explain why. But let’s start with ‘pre-registered’ cars. First of all let’s be quite clear, there is no such thing as a pre-registered car in the way that it is advertised by dealers. Even the head of CAP HPI refers to pre-registered cars when referring to cars that are registered then sold when they include huge discounts. The pre-registering of highly discounted cars is an illegal act made illegal by Stephen Byers when he was Labour Trade Secretary in 2000.

He was concerned that the practice carried out by manufacturers who forced their franchised dealers to buy cars, albeit at heavily discounted prices, was skewing the new car registration figures. So as part of his Supply of New Cars Order 2000 it was made illegal to pre-register cars, here is the excerpt:

This order was made under the monopoly provisions of the Fair Trading Act 1973. It prevents new car suppliers from:

• discriminating on price between dealers and fleet buyers
• providing bonuses and discounts to dealers on pre-registered cars
• imposing on dealers restrictions on price advertising

Now let me be clear, dealers can pre-register cars but not as a result of increased incentives applied by the manufacturer on individual cars. However, some dealers and manufacturers have found a way around this. As an incentive and across the board, a dealer will be set a sales target for the month/quarter/year and he will be paid a Volume Related Bonus (VRB) by the manufacturer if he can achieve the target.

This money is paid retrospectively on all cars sold during the month, quarter or year. As the bonus is not specifically on the ‘pre-registered’ cars they kind of get around the regulations. As an example let’s say the dealer is offered a VRB of £2,000 per car provided he hits his target of 100 cars for the month. With a few days to go he has sold 90 cars and he is aware that if he doesn’t sell the 100 he will lose £200,000 VRB.

So in order to hit his target he pre-registers the 10 cars in the name of the dealership and pays his normal purchase price for the cars – keeps him onside with the Supply of New Car Order. He now factors in the £2,000 per car that he will receive as additional discount then adds in the normal discount that he would include in the deal making the car a cheap car.

I’ve heard of some dealers preregistering cars and selling them through auction just to recover a reasonable proportion of the money spent out rather than have the cars sitting on their forecourt. Whilst the above may sound like pre-registered cars are a great idea there are other, far more shady, methods used to heavily discount cars and sell as new cars even though they have already been registered. Some, not all, car supermarkets have been known to use this method as well as some dealers.

The cars are diverted from where they were intended – daily rental companies, driving schools or insurance company/bodyshop courtesy cars. When supplying cars to these companies the manufacturer uses part of his marketing budget to heavily discount cars that either get them seen on the road more or are driven by potential buyers. In my experience a daily rental company can buy cars at up to 45% off the list price with 20 – 25% being very common.

In order to get around the Supply of New Car Order dealers started to set up their own daily rental companies and bought their ‘pre-registered’ cars through the new operation at huge discounts then sell them on to buyers, having never put them out on hire, with just delivery miles on the clock, on big discounts as ‘pre-registered’. Nothing wrong with that. Of course the extra name in the log book will affect the resale value of the car – but only marginally. But this is where the 3 month rule comes in.

If you have ever bought a pre-reg. car you will sometimes be told that you won’t receive the V5 log book until after 3 months. This is because in order for a daily rental company to qualify for the extra discount they (normally) have to keep the car for a minimum of 3 months or say 5,000 miles, whichever comes first. Now if the manufacturer wants to carry out an audit the dealer needs to be able to show the auditor that he still has the car.

Whilst he may argue that the car is out on hire, so can’t be inspected, he can produce the copy of the V5, supposedly proving that he still has the car, and everyone is happy. Again, whilst this is shady, is this something that a buyer should worry about? There are also some dealers who will keep the cars in stock for 3 months to avoid this situation. But here’s the crunch. Remember that I said these cars were intended for daily rental companies and they are then supposed to be sold as used cars after 3 months?

Well, many years ago I became involved in this process. Before realising exactly what was going on, I had been arranging stocking finance for wholesalers who would arrange to buy batches of brand new cars from daily rental companies and sell on to car supermarkets for a small profit, similar procedure to the operation following the Stephen Byers order.

This allowed the car supermarkets to sell new cars at less than main dealers could buy them for. The daily rental company would order say 100 cars that would be funded by the wholesaler. The cars would be diverted, at the time of delivery, to the wholesaler who would pay the daily rental company £100 per car for their trouble – they never actually saw the cars.

However, as the cars were intended for daily rental I had calls from dealers, and one comes to mind, who would say that the manufacturer had produced a batch of cars using up old stock of parts, for sale to daily rental companies. In this particular case the interior trim was lower grade, items were missing in the car such as cup holders and front fog lights were missing, all part of the standard spec. of the model badge on the back of the car.

In return the dealer knocked off £250 per car. The wholesaler agreed but do you think he explained this to the supermarkets who were selling these cars as brand new but pre-registered cars? Of course not! It would be fine to sell the cars in their sub spec. condition to the daily rental company who were supposed to rent them out.

A customer is hardly likely to refuse a rental car because the interior trim didn’t match the manufacturer’s brochure for the model he was hiring. And of course they were to be sold as used cars at the end of the 3 months or when they had covered 5,000 miles so the buyer would be buying not a new car but a used car as seen.

There is another way that you can achieve a big discount on a ‘pre-registered’ car. When there is a new model coming out or a facelift on the current model the dealers need to make way for the new model and get rid of the old model cars so he practically sells them at cost but they don’t always tell you about the new model.

I’ve also heard of cars turning up at the customer’s house only to find that he has bought or leased an old model car when he thought he was buying the new model. So check the spec. very carefully if you are going to buy a pre-registered car – it may not turn out to be what you thought you were buying. Oh and some of the cheap lease deals are cars as illustrated above so make sure that you check the spec. meticulously.

You sometimes get what you pay for. Moving on to ex-demonstrators. There are two points to be made here. First is the discount. Demonstrators are taken by dealers not just to demonstrate the basic car. They will often have a mass of options fitted, clearly so that they can be demonstrated to potential customers.

So when they tell you that they will knock 8 grand off the list price of the car that’s the list price including the options that may still make this used car, having had multiple drivers, more expensive than the brand new car with the standard spec. which is what you were originally looking for.

Their trick is to compare the cost of the demo with the full list price of the new standard car – but you’d not have paid full list on the new car in the first place. Balance up the desire of the options and the fact that the car is used against a new car without the options and with a discount. Secondly we have perception.

When you call into a dealership and take a demonstrator out with a nice salesman beside you, toodling along at 30 mph you believe that this is the way that all ex-demonstrators have been treated. Well, let me correct that perception. Many years ago in industry as general manager in one of the UK’s most successful PLC’s, I had a fleet department report into me, responsible for around 700 vehicles.

With a fleet that size we were signed into the manufacturers’ demonstrator programmes which meant that every day transporters of brand new cars would turn up, with virtually every make of car on board, that we would have on loan for anything up to 3 months, often 2-4 weeks. I would allow our sales and service staff to use these cars. As they weren’t their own company car they would proceed to ‘burn rubber’ out of our depot and treat the cars like rallycross cars till they were returned.

As we didn’t own the cars I wasn’t worried but at that point I thought to myself I will never ever buy an ex demonstrator as I know how many of them are treated. Oh and often dealer sales staff get to use the demonstrators for personal use and I’ve seen the way they drive them away from the dealership so I strongly recommend that you give ex-demonstrators a very wide berth or you may end up spending more time waiting for repairs to be carried out than actually driving the car! By Graham Hill

One of the things I’ve never quite understood is the way that so many industries, the motor industry in particular, avoid like the plague the rights of consumers. If the rules are considered to be unfair on the providers then the industry should fight to have them changed.

Take for example personal contract purchases (PCP). Dealers try to con customers into coming out of the agreement early in order to put them into another new car. They will tell the customer that they are simply taking their old car back and allowing them to go again with a brand new car.

Nothing wrong with that you might think but they are exercising, on behalf of the customer, what is known as Voluntary Termination (VT), sections 99 & 100 of the Consumer Credit Act. This allows a customer to simply hand back anything (cars, TV’s, lounge suites, computers etc.) he has on HP or Conditional Sale after 50% of the total cost has been fully paid.

Again nothing wrong with that, it’s your legal right. However, few dealers actually explain the process properly and forget to mention that whilst exercising a VT shouldn’t affect your credit score it is noted on your credit file and could affect your ability to obtain finance in the future. Miss-selling? Only time will tell when the claims companies move into the PCP arena.

Now that process exercised by car dealers, as it seems to have a somewhat minor affect on the leasing companies that provide PCP, has become an acceptable practice as it would seem very few people exercise the VT right in order to obtain a car a little early anyway.

However, when I suggest that people who are locked into a PCP, should use VT to terminate their agreement early in order to avoid a service and MOT that is usually due just as the car is due for return at the end of a 3 year agreement, you’d think I’d turned into Satan himself! Even worse when I go on to use VT to avoid excess mileage charges.

Let’s say you have been conned by a salesman to take out an agreement based on 5,000 miles per annum, without him asking what your actual mileage is likely to be, and find that you have actually overshot the mileage allowance by 20,000 miles. It is common to find that you will be facing an end of agreement excess mileage cost of £2,000.

So I suggest that the driver VT the car to avoid the excess mileage charge because if you return the car under the VT rules there is no reference to mileage so in theory you could be 100,000 miles over the mileage allowance but as there is no mileage restriction on the VT of a PCP, as long as the car is in reasonable condition you can VT the car.

Finance companies will try to charge the excess mileage on a pro-rata basis but here’s the thing, they are abusing the law. They know that they can’t charge the excess mileage but they do it in order to frighten the driver with a court case. And that shouldn’t be allowed to happen. The lender knows the rules perfectly well but they are allowed to frighten customers into parting with cash – it’s not right! By Graham Hill