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Discretionary commission arrangements have been banned in car finance by the Central Bank of Ireland since July 2024. Stock image. Photo: Getty
Q It recently came to my attention that the interest rate charged to me on a hire purchase deal was significantly higher than that of a friend, who arranged car finance with another dealer for a similar car. I also learned that the dealer received a hefty commission after selling me the car finance, and that the higher the interest rate he charged me, the higher his commission. Is this legal? The dealer gave no indication that such an arrangement was in place.
A This is known as a discretionary commission arrangement. This is where a credit intermediary, in your case, a car dealer, has the discretion to set the interest rate charged for finance, and where the dealer’s commission is linked, wholly or partially, to that rate, said Michael Kavanagh, CEO of the Compliance Institute.
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