The Best Car Finance Blog In The World

Let me take you back a few years. I used to arrange stocking finance for dealers and traders i.e. they borrowed money to buy their stock then as they sold the vehicles they repaid the loan. On one occasion I was approached by a wholesaler who bought cars in bulk with big discounts and sold them to car supermarkets in smaller batches.

So they would buy 100 cars as a minimum then sell them in batches of 10. It turned out to be an accomodation. The cars were being bought by small daily rental companies who were given up to 45% discount by the manufacturers but funded by the wholesalers via me. The wholesaler would pay for the cars and pass back £100 per car to the rental company. In most instances, the daily rental company never saw the vehicles.

The wholesaler took £250 per car then sold to the supermarkets, still at massive discounts. I didn’t know this at the time but found out much later. On one occasion an order had been placed for 100 cars through a dealer. I won’t say which manufacturer. Before delivery, I had a call from the dealer. He said that he had 87 cars produced that were sub-spec. I didn’t know what this meant so asked to have it explained.

The dealer said that whilst the cars were all GL (not the actual model) the cars had fitted L spec. upholstery, missing fog lights and missing cup holders. He then asked if we wanted them? If we did he would knock £250 off the cost of each car. I called the wholesaler and told him what the dealer had said. He said that he was happy to include the 87 cars in the batch of 100 cars. He asked if they all had GL badges which the dealer confirmed.

Clearly selling sub spec. cars to daily rental companies is not a problem, after all if you were to hire a car for a few days you wouldn’t be questioning the interior or the missing spotlights not matching the model. You just hire the car. And although it has been questioned in the past, the daily rental companies can sell the cars after a period of time, normally 3 months or 5,000 miles, whichever comes first, as a second-hand car – as seen. So if the buyer is happy with the upholstery and lack of spotlights they will simply buy the car.

I don’t doubt for one minute that the wholesaler ‘forgot’ to tell the car supermarkets that items were missing. They would have simply thought they bought new GL’s and sold them as pre-registered cars to customers. At this point, I stopped providing the finance as I wasn’t comfortable as this was a very dubious operation even though I heard that the manufacturers were aware of what was going on and turned a blind eye.

Now given the fact that the car supermarkets were selling new cars at less than the dealers could buy the cars from the manufacturer for it led to car dealers setting up their own daily rental operations which they used to buy heavily discounted cars registered in the name of the daily rental operation. This came about after the Supply Of New Car Order 2000 prevented dealers from pre-registering cars and selling them for less than they would sell a normal new car for.

So why should this concern you? The fact is that these cars can easily be switched into the contract hire supply chain. The leasing company doesn’t see the cars beforehand and neither does the driver who probably doesn’t think of inspecting the car to see if any of the spec. is missing. In one instance one manufacturer had more diesel engines than they needed to keep in stock having changed the engines to a more efficient one. They also had a new body design but fitted a batch of new cars with old model engines – offering brokers an extra £2,500 discount per car.

As a result, I was aware of this and leased two cars after splitting the discount between myself and the customers who were fully aware that the new shape cars had old style engines fitted. But there were plenty of ‘brokers’ who were arranging leases on the cars as though they were heavily discounted fully spec’d ‘new model’ cars.

So again – a low rate could be hiding a sub spec. car.

Know who you are dealing with and what you are getting. We will only supply genuine cars from reputable dealers. By Graham Hill