Dealers urged to be upfront on commission payment issues as buyer doubts grow

A new survey has revealed that half of car buyers are reconsidering using dealer-provided finance due to concerns over undisclosed commission payments.

The findings come amid ongoing legal scrutiny following last year’s Court of Appeal ruling and an impending Supreme Court decision on the matter.

The Motors Consumer Insight Panel found that 53% of buyers are aware of issues related to motor finance sales, with awareness rising to 59% among men and 63% among over-55s. Awareness is higher among new car buyers (63%) compared to used car buyers (50%). Additionally, 46% of informed buyers say they would reconsider or reject dealer-provided finance altogether.

Lucy Tugby, marketing director at Motors, highlighted the need for dealers to be transparent about their finance processes due to the ongoing legal proceedings having understandably created uncertainty among buyers.

“Our research shows how awareness of the issue varies widely depending on factors such as demographics and whether customers are buying new or used.

“We advise that dealers are open about the action they have taken to improve their processes to build trust with car buyers. This provides an opportunity to improve transparency earlier in the sale process, as per the Financial Conduct Authority’s guidance on understanding the role of commissions and finance,” she said.

The survey also found a growing trend toward monthly payment plans. While 61% of current car owners purchased outright, only 53% plan to do so for their next vehicle. Outright purchase customers spent an average of £13,957 on their last car. Monthly payments currently average £334, with variations by vehicle type: used cars over two years at £325, nearly new cars at £344, and new cars at £354.

Tugby noted that the trend toward monthly payments reflects consumer preferences for affordability and convenience, adding that there is clear demand for financing solutions that are both competitive and transparent. Dealers can increase finance penetration by offering attractive, compliant finance options that build consumer confidence.

The research was conducted by Insight Advantage, an independent market research firm, from 6-9 January 2025. The survey sampled 2,003 adults who are sole or joint decision-makers in car purchases.