Representative Example: You could borrow £10,699 over 60 months with an initial payment of £495.89 (including £199 Admin Fee) followed by 58 monthly payments of £296.89 with a final payment of £495.89 (including optional £199 Option to Purchase Fee). Total amount repayable will be £19,012,40. 26.1% APR, annual interest rate (fixed) 13.3%.
Commission Disclosure in Car Finance
If you’re applying for first time car finance in the UK, you might be told that the lender or broker earns commission. This is called commission disclosure, and it's something you have a right to understand. In this guide, we explain what commission disclosure means, how it affects your car finance agreement, and why it matters when choosing a finance provider or broker. Understanding the commission disclosure helps protect your rights and ensures transparency when arranging your HP car finance.
Commission disclosure in car finance means that a broker or dealership must tell you if they’re earning money for arranging your agreement. This payment is called a commission, and it’s usually paid to the broker by the car finance lender once your agreement is signed.
Brokers and dealers are required to tell you if they’re being paid commission and how it works. This helps you understand whether the advice or product you’re being offered is based on your needs or on how much the broker might earn.
Most car finance deals are set up through a broker or dealership, not directly with the lender. For helping arrange the agreement, the lender pays the broker or dealer a commission.
This can be a flat fee or a percentage of the loan amount. For example, if a broker earns 2% of the loan amount, then that’s £200 commission on a £10,000 car loan. Sometimes, it depends on the interest rate offered, meaning the broker earns more if you’re given a higher rate. That’s why it’s important to know whether commission is part of your car finance deal, so you can check that the agreement is right for you and not influenced by how much commission car finance brokers might get.
Yes, it can. If the broker’s commission depends on the interest rate, they might be incentivised to offer a higher rate than you actually qualify for. This means your monthly repayments and the total amount payable could end up being more expensive than necessary.
Being told about commission helps you understand whether the deal is truly in your best interest. It also allows you to compare options from other lenders, brokers, or dealerships to find one that offers better value. This is important when affordability is tight because just a small increase in interest rate can potentially add hundreds of pounds to the total cost.
Under FCA car finance rules, any broker or dealership involved in your car finance agreement must tell you:
Some lenders and brokers choose to go further by including the exact amount of commission on the pre-contract documents or finance agreement. This kind of transparency gives you extra confidence when making your decision. This part of treating customers fairly, which is a core principle of the FCA.
Not necessarily. Not all commission structures are bad, but it is about transparency and not avoidance. Commission is a normal part of car finance, and many brokers and dealers provide fair car finance and helpful services. But problems can happen if you aren’t told about commission or if it influences the deal you’re offered. This is why it’s essential to choose a reputable car finance company that follows fair commission practices.
If the broker is recommending a product that seems more expensive than others, ask why it was chosen. It’s worth checking if your rate is fair and whether commission is linked to that rate. This gives you better control and helps you make an informed decision.
If you’ve already taken out car finance and didn’t know about the commission, you may be able to raise a complaint, to complain about a car finance broker. The rules require brokers and dealers to be open about any payments they receive from the lender. So if you feel that you were misled then you can start by:
If you’re unhappy with their response, you can contact the Financial Ombudsman Service, which looks into complaints about unfair treatment and poor disclosure. You usually have up to 6 years from the agreement to raise a complaint.
If you want to know more about commission in car finance or need help understanding your agreement, your first step should be to contact your finance provider or reach out to your hire purchase (HP) car finance lender for more information. They must explain how your deal was arranged and whether commission was involved.
If you’re worried about affordability or feel the deal was unfair, you can also get support from free advice organisations like Citizens Advice or MoneyHelper . Knowing the facts about commission can help you feel more confident and in control of your next UK car finance decision.
