Dealers are collectively missing out on up to £246m a year in finance revenue ono used vehicle through using difference in charges (DIC) commission structures rather than annual percentage rate (APR) commission structures, a survey by Hitachi Capital Motor Finance has found.
Hitachi said the average used car dealer was missing out on additional revenue of £26,031 a year per site in APR based commission alone.
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Hitachi also argued that APR based models were simpler to administer, as they ensured customers were fully aware of the costs of the loan including monthly payments, interest charged and the APR.
Lisa Harrison, head of business development for Hitachi Capital Motor Finance said: "Despite the strong performance of new car sales, dealers are continuing to face pressure on profit margins. This study underlines the need to approach used sales revenue in a structured way.
"We know that right finance product on used vehicles can help close the sale and build customer loyalty."
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By GlobalData
