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Yes, either Directly Authorised or as an Appointed Representative of a Principal Firm.
If you’re unable to spare the time or effort to go through the FCA Handbooks (Finance = Consumer Credit Sourcebook CONC, General Insurance = Insurance Conduct of Business Sourcebook ICOBS) and understand how they relate to your business, feel free to reach out to us for assistance. We can help interpret the regulations and provide guidance.
This person has to know and meet the regulatory requirements as well as understand how the regulations apply to them.
The length of time over which you agree to repay the finance – also referred to as the Length of Agreement.
ANNUAL PERCENTAGE RATE (APR)
The APR shows the annual cost of a finance agreement over and above the amount you have borrowed. The APR will include interest rate charges and any other fees included in the agreement, such as administrative fees. By law, the APR must be shown on relevant documentation presented to customers in showrooms. You can use the APR to compare the cost of different finance products.
BALLOON PAYMENT/FINAL LUMP SUM
A balloon payment is the lump sum deferred to the end of a finance agreement on Personal Contract Purchase and Lease Purchase agreements. Making this payment completes the finance agreement and allows you to take ownership of the vehicle.
The Financial Conduct Authority (FCA) expects the dealer to disclose to the customer that a commission may be payable by the lender to the dealer, and, if the customer asks, the amount of that commission. The Financial Conduct Authority has made it clear that “commission” means any financial consideration.
‘Rental’ agreements where you cannot become the legal owner of the vehicle as you are merely renting it from the finance company. The finance company as the owner is listed as the Registered Keeper on the DVLA V5 form. Optional vehicle maintenance packages can be included.
A credit agreement is a legally binding contract between you (the customer) and the finance company. It must include details of the loan amount, the term, rates of interest, other charges and your rights and responsibilities for the duration of the agreement. You will receive a copy of the agreement you have entered into.
A deposit is often required to secure and finance your vehicle. The larger the deposit the less you will need to borrow, and this could mean lower monthly payments. A deposit could be cash or part exchange or a combination of both. If you are part-exchanging your vehicle and you still have outstanding finance, then your deposit will be the part-exchange value of your vehicle less the outstanding settlement figure. Your dealer should be able to take care of these arrangements for you.
A vehicle is an asset, but inevitably with age and wear and tear it will reduce in value. This is depreciation.
This is when you pay off a finance agreement before the agreed term is completed. By doing so you may save on the interest that would have been charged for the remainder of the agreement.
A Future Value is equivalent to the deferred balloon payment and is set based on the estimated value of the vehicle at the end of the agreement. This value assumes that when returned the vehicle is within the set agreed maximum mileage and in good condition.* The FV is deferred to the end of the agreement and, along with any purchase fee applicable, is the Final Payment. The risk of depreciation above the level of the FV is taken by the lender, so the customer can hand the vehicle back with nothing further to pay at the end of the agreement. *If the vehicle is in good condition and has not exceeded the agreed maximum mileage, you will have nothing further to pay. If the vehicle has exceeded the agreed maximum mileage, a charge for excess mileage will apply. Further information on what is considered good condition can be found at www.bvrla.co.uk.
HIRE PURCHASE (HP)
The lender buys the vehicle on your behalf less any deposit that you have paid to the dealer. The amount paid by the lender plus interest is then paid by you over agreed period of one to five years. (Subject to the Lender)
An initial rental is similar to a deposit. The larger the initial rental the lower the monthly rentals. The initial rental is a cash payment.
Lease Purchase is essentially the same as a standard Hire Purchase agreement, but with a large lump sum which is deferred until the end of the agreement. Unlike PCP, there’s no Future Value (FV) and you do not have the option to return the vehicle to the lender at the end of the agreement, other than any voluntary termination rights that you may have under the agreement. You agree the final payment at the start of the agreement, so you can budget more easily. At the end of the agreement you have two options, make the final payment and obtain ownership of the vehicle or Part exchange for a new vehicle (if the part exchange does not cover the final payment you would need to pay the shortfall to settle the finance agreement). New finance agreements are subject to status.
An optional, chargeable product offered by lenders and dealers to spread the cost of motoring. Maintenance contracts usually include vehicle servicing and repairs, as well as replacement of wear and tear items such as tyres.
A credit agreement not regulated by the Consumer Credit Act. Therefore not bound by the same legal requirements as a regulated agreement nor offering the same type or level of protection.
OPTION TO PURCHASE FEE
A voluntary payment at the end of some finance agreements (such as hire purchase) which, if paid, transfers ownership of the vehicle from the lender to the customer.
Part-exchange involves trading in your existing vehicle and using its value as part payment for your new vehicle, perhaps to help fund a deposit under a finance agreement.
PERSONAL CONTRACT HIRE
‘Rental’ agreements for consumers where you cannot become the legal owner of the vehicle as you are merely renting it from the lender. The lender as the owner is listed as the Registered Keeper on the DVLA V5 form.
PERSONAL CONTRACT PURCHASE (PCP)
PCP is essentially, the same as a standard Hire Purchase agreement, but with a significant proportion of the amount of credit deferred until the end of the agreement. This deferred amount or RV, is the value of the vehicle at the end of the contract and is based on an agreed term and mileage and is guaranteed if these terms are met and avoids the risk of unplanned depreciation of the car. At the end of the agreement you have the following options: Part-Exchange for a new car: Trade in your car and any amount over the pre-agreed RV is yours to use as a deposit against your next car Hand back your car: If the condition and mileage are as agreed then simply hand it back and walk away with no further payment required Buy the car: Pay the RV and own the car outright Return the vehicle and not pay the Final Payment. N.B If the vehicle is in good condition and has not exceeded the agreed maximum mileage you will have nothing further to pay. If the vehicle has exceeded the agreed maximum mileage or is not in good condition excess charges may occur the expected condition guidelines can be found at www.bvrla.co.uk; Practical guidance can be found using the Vehicle Return Standards Tab,
Most types of credit and hire agreements are covered by the Consumer Credit Act, which gives you some important rights, such as your right to cancel the agreement within a given time and protection against both the finance company and the seller for faulty goods. An agreement covered by the Act is called a regulated agreement. An agreement will be regulated if:
• The borrower is an individual borrowing for mainly personal use rather than business use;
• It is not an exempt agreement – exempt agreements include things like gas and electricity agreements and loans from employers, these agreements are not regulated by the CCA. If your agreement is regulated under the Consumer Credit Act, the lender will provide you with the information before, during, and after the agreement is taken out and give you a written copy of the agreement.
By law, goods sold must be of satisfactory quality and fit for the purpose for which they were intended. Where there is a credit agreement in place, the lender has a responsibility for the quality of the goods and to resolve any disputes where the goods are not of the required standard.
You have a right to end the agreement by giving the lender written notice. If you do so, you must immediately return the goods to the lender, which includes making the payments detailed in the ‘Termination Your Rights’ section on your credit agreement.