UK Car Finance Lenders in Trouble For Allegedly Overcharging

Three Lloyds finance businesses are looking at High Court action for allegedly overcharging on their car finance.

Car finance can be overcomplicated, and at Car Credible, we pride ourselves on simplifying the process as much as possible to make it easy to understand and accessible for all.

Buying a car is one of the most expensive purchases one is likely to ever make, so you must have all of the required information and a trustworthy lender to make the process as seamless as it should be.

We ensure to provide you with all of the information you need to know about your car finance deal, and the ability to apply for car finance and search for cars on Car Credible most effortlessly.

Do you have a car on finance and would like to reduce your monthly repayments? Sign up with Car Credible today; we could help you save money on your deal.

Check your deal now

We work with a selected panel of lenders, who are reliable, trustworthy and aim to provide you with the best customer service, all from the comfort of your own home. 

Car Credible makes taking out a new finance deal, part-exchanging your existing car, searching for a new car, and refinancing as easy as possible, providing you with all the facts you need to know to make an informed decision based on your needs and budget.

How Car Credible can help you with your car finance

When you're looking to borrow money from a lender, you typically want to find one that is prepared to offer you exactly what you need and with a respectable APR, so you're not paying more than you should or need to be.

It's a competitive landscape, and lenders want to strike a balance between lending money to gain profit and lending money to the right people to ensure repayments are made on time and in full.

At Car Credible, we monitor your car finance deal every month, updating you on when your equity has changed and when we believe it is a good time for you to switch to a newer car or refinance your deal.

We pride ourselves on getting you into the best deal for you at the best time, so you are not overpaying on your car finance, and you're able to reduce monthly repayments and save money where possible.


Lloyds businesses in trouble for overcharging car finance

Three Lloyds businesses have been accused of overcharging customers for taking out loans on used cars between 2015 and 2021. As a result, they are facing High Court action.

The three lenders in question are Black Horse, Santander and MotoNovo Finance, and they control over half of the UK's car finance sector, so there's a strong chance that you may have been affected across the seven years.

They are accused of applying excessive interest on customers' car finance loans of almost £1 billion in total. Of that amount, it's claimed Black Horse added £624m, MotoNovo Finance £209m, and Santander £166m.

Allegations against the three lenders

Not only does it appear that the lenders overcharged customers' interest rates, but as a result, credit brokers were getting higher commissions than they would have if the figures were correct.

The action against the three businesses alleges that customers, against their will or knowledge, were being charged higher rates as a result of an anti-competitive network agreement between dealerships and finance providers.

The Financial Conduct Authority (FCA) abolished discretionary commissions such as the work in this case in 2021.

Check your deal now

What's been said, and what happens next?

Doug Taylor, Enfield Labour councillor is leading the High Court action, and he told the Daily Telegraph that customers had been taken advantage of by these businesses.

"Affected consumers unknowingly paid more for their car loans because of the way these companies incentivised dealers,” he said.

A spokesperson for Black Horse said: "We are committed to ensuring customers have clear and transparent information so they can make informed decisions about the products they choose. 

"Following the FCA’s motor finance market review, new rules were set out for the industry in 2021, which we have implemented. We continue to comply with regulatory requirements that apply in relation to the payment of commission and the disclosure of commission to customers.”

The three businesses have appealed, and the High Court will decide whether the action proceeds or gets thrashed out.


What is an interest rate?

Interest is the amount of money the finance company requires you to pay as the cost of borrowing. The interest payable in terms of a motor finance agreement is calculated by applying the interest rate to the amount of credit over the length of the agreement.

How do I know if I've been overcharged interest?

It's highly likely that you would not have known you were overcharged interest. Now that this news has come to light, you could contact your lender to find out if you have been overcharged and if so, what actions will be taken.