When I bought my new IS250 in January I was conned by the salesman at Lexus Croydon into taking out a finance agreement that I did not need and that was much more expensive than Lexus told me, so I think other potential buyers should be made aware of their tactics. It is apparently approved procedure to provide misleading and/or incorrect information, as the response to my complaint was basically that the loan is unregulated so they can do whatever they want.

The 3 tricks I fell for were:

1. The "low" interest rate. Throughout the sales process the salesman concentrated on the "flat rate" of 3.25%. What he never mentioned was that the true cost of the loan (the APR) is actually 6.65% - I only discovered this when I calculated it for myself once I had the paperwork. Their response when I complained - "your Agreement is Unregulated and therefore an APR and/or interest rate are not required to be stated".

2. The salesman showed me that I would be much better off financially by taking out a loan rather than using my savings. The calculations he used to "prove" this turned out to be completely incorrect, and he has since agreed that I am actually worse off and should have used my savings. I was not able to check his calculations until I had signed the agreement as he did not let me have a copy after the initial meeting. Their response when I complained - "As the Agreement is Unregulated the Consumer Credit Act 1974 does not apply and therefore pre-contractual information is not provided"

3. The salesman told me that I could pay off my loan at any time without penalty, but when I actually asked to pay it off they said there was a standard penalty that would be applied. Their response when I complained - "Early settlement charges were not discussed at the point of sale ... it was not a subject that you raised for discussion at any time throughout the sale process." This response is a bare-faced lie (and I am more than happy to go to court if they wish to claim otherwise!).

I had previously assumed that Lexus was a respectable organisation with a good reputation for customer service. I now realise I should have treated them with the same caution as a dodgy second-hand car salesman. It is a great shame as I am very pleased with the car itself, but I will never do business with this organisation again and I would have to advise anybody who asked me that they should steer well clear of them too.

Paul

have you contacted Lexus GB direct, or a solicitor!

I first contacted Lexus Financial Services direct, then when I got no joy I went to the Finance & Leasing Association. Lexus Financial Services are still sticking to their view that they haven't done anything wrong, so I shall now be using the Finance & Leasing Association arbitration process to see if I can make them do the decent thing. I'll let you know how I get on!

Paul

please do, this is the first time ive heard of this occuring....

This sounds very odd

I thought that any firm offering credit faclities had to be regulated by the Financial Services Authority (FSA), so your loan must be regulated and fall within the law. I recommend that you contact the FSA as they will be very interested in any breaches of the law.

Also, the agreement you signed should have had the APR clearly stated. If not, that is a serious infringement.

Exactly the same happened to me at Lexus Sheffield last year. Needless to say I did not take them up on the excellent flat rate!!

All financial agreements for credit are governed by the consumer credit act 1974. There are exclusions if your loan was over £25,000 though. This has now been amended in 2006 and due to come into force 'soon'.

If not excluded from the act the credit document by law should state the APR (they do not have to quote it verbally to you but written examples must by law show it).

You are correct that Flat rate always seems to be quoted (and it gets up my nose too), as a rough guide, flat rate is approximately half of an APR. They are not directly interlinked so it is only a guide. The FISA website (www.fisa.co.uk) has a DOS program that will calculate your APR from flat (fairly accurately) and repayments etc. In short always insist on a quoted APR or do not sign.

They MUST give you a copy of your credit agreement.

I would certainly contact the FSA, CAB and possibly a solicitor in your case (although just over 6.6% is not bad for car finance at the moment....if you need it, which it appears that you did not).

The OFT and OPSI government websites will give you a lot of the information you may want.

I would not necessarily blame Lexus FS as they simply supply the credit but did not sell it to you. I see it as a fault & direct mis-representation by the salesperson/finance person at the dealer that is to blame here.

That doesn't seem like a very nice experience you've had there - hope it got sorted

However, I never understand why people don't like being quoted the flat rate of interest. The flat rate, is the actual interest you will be paying, and at the end of the day, that's what I always want to know. The APR is a made up number, and can be fiddled (within guidelines) to be whatever they like - so its possible to have a low APR, but you're actually paying quite a high flat rate.

No one asks for an APR when they take out a mortgage, so why do they for a car loan. And a flat rate of 3.25% is fantastic, if someone could sort that out for me on a mortgage, I'd be very happy indeed

In addition, with a rate of 3.25%, surely you would've made money by taking out the loan and keeping the cash in your savings account (cos I know mine pays higher interest than that)

Actually, at the risk of going off topic, you can only compare any loan with the APR, however you have to be careful how these are quoted. With the Lexus Financial Services model, if you crunch the figures quoted for repayments and final settlement figure, it works out almost exactly double. This will be because of the set up costs an the fact that you are only paying approx 55% of the total loan over the loan term - or there abouts, then the balance as a lump sum at the end. However most mortgage rates quoted at approximately 6.2% etc will return an APR of say 6.5%. That said, if you have a mortgage and the rate is variable in the uncertain market today, a flat rate of 3.25% with an APR of say 6.5% fixed over the 3 year term doesn't sound too bad, particularly if you can offset part of the loan interest against Tax, if you use your car for business etc. With regards to taking the loan and investing the money, one has to remember the interest earned in a standard savings account can attract tax to be paid. I feel that it depends on your individual circumstances. But I agree the case in point is the fact around disclosure of the information. I received a similar sales pitch at the dealer when I purchased my car. I feel that the sales team probably have a quota of financial packages they have to sell, and I am sure that you may get a better deal on purchase price etc. if you agree to one. But this only works if it suits you as an individual.