The FLA has issued guidance to members to help improve the information provided to customers on motor finance agreements through the provision of summary information at the point of sale and during the contract.
Why provide summary information?
Summary information should be provided at the point of sale which captures the key features of motor finance agreements, helping prospective customers to: understand the agreements they are being offered; decide if they are suitable or not for their circumstances; and to compare different offers and products.
What does summary information look like?
The way the information is displayed and the format this is delivered in can vary depending on the lender. However, the guidance highlights four areas which the summary information should cover to ensure the customer understands the finance product before they proceed:
- the cost of the product (e.g. the monthly payment and total amount payable);
- any significant restrictions (e.g. a mileage limit);
- the options for terminating early, and
- whether the customer would own the vehicle.
Why provide information during the contract?
Some types of finance agreement have conditions – such as mileage limits – which, if breached, could have financial consequences for customers if the breach is identified only at the end of an agreement. It is therefore in the interests of the customer, dealer and ultimately the lender – if customers are reminded of these conditions and/or alerted to breaches during the contract so they can adapt their usage of the vehicle accordingly.