How we make our money (and why)

Last updated 25 November 2024

How we make our money (and why)

If you’re here, it’s likely that you’re looking for a new car.

Hello. Welcome. We’re so glad you’re here.

And, dare we say it, you’re absolutely in the right place if hassle-free driving is your desired destination.

It’s also likely that you’re wondering how adding an intermediary such as a broker (and therefore another business that needs to make money) can prove to be beneficial for your car search, both in terms of the costs you commit to and the care you receive along the way.

We commend your curiosity. 

Hop aboard as we answer all your burning questions.

Questions that have become even more important in light of the increased scrutiny on commission within the automotive industry.

Customer needs

We’re starting with you, the customer. Just as it should be.

The benefits of leasing brokers are abundant – but we exist to bring you so much more than a great car for a great price.

We also know you value things like speed, transparency, information security, the human touch, knowledge, choice and stock availability.

So, we’ve purposefully and carefully built our offering around these things, ensuring you benefit from a class-leading experience that you can’t get anywhere else.

Making sure we have the best people and systems to supply a service that will keep you coming back? That takes experience, relentless hard work, continual learning, evolving technology and, ultimately, investment.

Equally important? Ensuring we do right by our lovely employees by being a darn good employer  that also works to minimise our ongoing environmental impact.

But that costs too.

Now, this isn’t a ploy to bamboozle you with big promises then land a hefty invoice on your doormat. You only have to read our customer reviews to see that competitive pricing is central to what we do. And we have teams dedicated to keeping our costs down so we can return those savings to you.

But it would be a disservice to talk about how we make our money without also confirming what we do with it.

As with any well-formed business, profit for our investors is ultimately the reason we’re here, and we couldn’t and wouldn’t exist without that immovable fact. But, unlike some, it’s also why we can proudly open the doors at HQ every morning (imagine us channelling THAT Aragorn entrance - but in cleaner garb - usually).

It starts and ends with providing our customers the level of service they both demand and deserve.

In a world where customer experience feels like it’s plummeting and its harder to get connected to an actual human being, we’ve been dedicated to doing things differently.

Transparency trendsetters

We fully support the movement towards growing transparency.

In fact, we were the only UK leasing broker openly disclosing regulated funder commission before it was a legal requirement, having done so since 2020. And we’ll continue to respond quickly and accordingly as laws, regulations and buyer needs change, to do our best by you.

But provided it is lawful, proportionate, honest and apparent, we’d argue that profit can be central to achieving good customer outcomes rather than posing a risk to it.

As such, you’re likely to see higher commission values on our best car lease deals.

Increased control allows us to achieve rentals and stock availability that you can’t find anywhere else (as we get onto a little later). But there are increased financial risks, and both logistical and operational costs involved in bringing them to you.

Our promise? A great lease deal won’t come at the cost of a quality or conscientious leasing experience.

A bit about us

At Carparison, we’ve always aimed to stand out from the crowd.

We’re not spring chickens (our lengthy skincare routines are there to prove it), with our teams collectively racking up hundreds of years of automotive experience.

With luxury car brands, mainstream ones, franchise dealerships and everything in between.

And, like you, both when selling cars and buying them for ourselves, we’ve longed for something else along the way.

Enter leasing: an undeservedly lesser-known product that recognises that access over ownership is a growing preference for drivers. 

More of us want to drive newer, better, more economical cars but don’t want to fund the whole car value, and pay the resulting interest, in order to have a purchase option we won’t use (like PCP and HP).

We want no resale hassle. No depreciation risk. Low capital outlay.

And, if you’re a business, there are tax benefits too.

What’s in leasing’s growing success? Allowing more of us to drive a newer and better car than we thought we could afford. Easily upgrading into the best models every few years, knowing the total financial commitment throughout.

That predictability is key – and you will need to agree an annual mileage and return the car in a condition reflective of its age and its total mileage. But, when combined with optional warranty and maintenance packages, easy budgeting is yours for the taking.

Although we’re obviously big fans, we can’t take the credit for founding leasing or even being the ones that provide that service. We have our panel of funders to thank for that and we act as an introducer rather than a provider – we’re a credit broker and not a lender.

But we can puff out our chests and pin on our gold star badges for how quickly, easily and honestly we introduce you to this offering, and how we support you until - and while - you’re behind the wheel.

What makes us different?

As a broker, we combine the produce of UK car manufacturers and dealerships with the funding of leading lenders.

It’s important to say that, although extensive, our partners are selected carefully. Primarily based on their offering and its proven quality. But also, unavoidably, commercial viability.

Because a financial relationship exists, we’re unable to offer impartial advice – other providers are available and you’re encouraged to shop around to ensure you find the most suitable deal for you. 

But that means that we have access to the millions of deals provided by our funders where they have agreements in place with car providers directly.

New commission structures mean our sway on the lease price is now limited, but you’ll still benefit from our uniquely hassle-free purchase experience and high levels of support.

The piece de resistance? The Carparison Exclusives.

We can purchase stock in bulk, which drives down the unit price. We can then commit to selling in volume, allowing us to negotiate the most attractive finance. Aided in turn by the breadth of our partners and the healthy competition that fuels.

But why isn’t everyone doing it?

Simply put, it’s a formula that isn’t imitable.

We claim that our power is in our people, and that sentiment rings true here. It lies in our own hard-fought relationships, industry knowledge, propensity for risk, proven reputation and our buying power.

A merging of very clever minds, years of hard graft, the cash to make it possible and the ability to reach the masses: a combination that is elusive to many of our competitors.

Our dealers and funders benefit from an agreed volume. You get more stock vehicles for a reduced price. We have the opportunity to make more, subsidise the inherent increased costs, and still pass savings onto you.

We then work relentlessly to present and package this in an efficient, honest, human-led experience. Delivered by people who care about what they do.

So, to return to our primary statement – choosing us as your leasing broker benefits you not only for an informed and convenient purchase experience. But also for our unique influence on the cars, availability and prices at your fingertips.

And how easy we make it to bundle in useful motoring extras.

Putting you in the driving seat of a great car, for a great cost, with great customer service to match.

That’s what gets us out of bed in the morning. And opening doors with vigour akin to the King of Gondor.

How does Carparison make money?

So, you know why we’re here and what our money is spent on.

But we’re also here to tell you where it comes from.

Importantly, we don’t make a penny until you’ve signed on the dotted line. Whether that’s on your finance contract or a subsidiary product, our renumeration is irrevocably linked to your interest in and desire to purchase the products presented to you.

If something’s not right, or if you unfortunately fail your credit check, you won’t be charged (and neither will our partners).

If you do place an order, our income could come from any combination of the streams listed below. It is a comprehensive summary and therefore an item may not be applicable for every purchase, or even the majority of them.

The amount of commission or other income applicable to the lease deals we advertise does not affect how the products are ranked using our online search tool. Lease deals will be ordered from lowest to highest monthly price, unless additional filters are added by the user that influence this ranking.

If the last few years has taught us anything, income streams appear as quickly and often as they vanish. Therefore, please note that this information is subject to change at any time.

From the customer

• Processing fee
  This is a one-off fee of £298.80 (including VAT) that we charge all customers once they have been accepted on finance and have submitted an order.
   
• Cancellation charges
  We retain part or all of this processing fee if you cancel your order after specified operational milestones (finance contract signed - half - and delivery booked - full).
  
  Additional fees will apply if costs have been incurred by us or our partners in the process of fulfilling or delivering your order. All cancellation charges are listed in our cancellation policy.
  
  This does not affect your separate funder cooling off period.
   
• Amendment charges
  An amendment charge of £60.00 (including VAT) will apply if you request changes to a vehicle or finance agreement after your signed order form has been submitted.
  
  All amendment charges are listed in our cancellation policy.

From the funder

• Finance commission

We receive finance commission from the funder for introducing their products to you.

The commission amount is already included in the financial figures provided online, in your quotations, and on your order form. As a result, it affects the total amount you pay over the duration of your finance agreement.

Commission values presented by us will always be VAT inclusive. However, business contract hire customers may see this listed on lender documentation exclusive of VAT.

Depending on the funder and whether your agreement is regulated or unregulated, the commission may be fixed, capped, uncapped, or a set percentage of the finance total. Details of the commission structure will be provided where applicable.

As with other financial details, commission values may change until your order is finalised. The final commission will be based on the terms you select, the chosen funder, the secured rate, and the vehicle information available at the time.

The confirmed commission amount will appear on your order form.  This is the earliest point all relevant details are finalised and cannot be changed.

Please note that commission amounts may vary at different stages of your journey with us. These variations are not based on individuals but reflect the specific deal you choose.

If you opt to include funder maintenance with your lease, an additional fixed commission may apply, which will be included in the total commission disclosed to you.

To proceed with your order, you will be required to sign your acknowledgement and consent to us receiving the commission amount when prompted to do so.

• Funder support 

In certain circumstances, we may receive an additional fee from the funder.

Named differently by each (sometimes marketing support, sometimes a business development payment, to name just a few), we’ve chosen to group this under the term funder support.

This fee is typically a fixed amount per sale, but in some cases, it may increase based on the total volume of business we introduce to the funder within predefined timeframes.

Funder support may or may not be included in the financial figures presented to you. When included, it will impact the total amount you pay over the duration of your finance agreement.

Where applicable, funder support is always reflected in the commission value and detailed in the structure information provided on your quote and order forms. This is the case whether or not it directly influences the amount you pay over the term of your agreement.

In situations where the support involves variable elements tied to future events, such as total annual sales volume, the best available projections are used. However, the actual figure may ultimately differ, either higher or lower.

Please note, this information is for your reference only. Any retrospective adjustments to funder support will not affect the financial figures quoted to you or the terms of your finance agreement.

• Extensions

We may receive a further set fee if you choose to extend your current contract.

The scale of this fee, and whether it applies at all, depends on the applicable funder and the format of your chosen extension.

From dealerships

Depending on the supplying dealership, manufacturer and the makeup of the deal, we could receive a fee for each unit supplied by them.

We consider the total profit when building our lease deals.

Although new commission structures limit this flexibility, dealer payments will only ever indirectly lower your monthly payments. This happens when we choose to reduce our commission in lieu of this alternative income.

In instances where we have subsidised the vehicle rentals, our income is likely to be a percentage of the original vehicle cost. But it could also be a set fee per unit.

In instances where we’ve bought stock and resold it to the funder, the resale price may be greater than the price we paid to secure the units.

From subsidiary suppliers

If you choose to add one of our chosen subsidiary products to your lease contract, we will receive a referral fee from them.

This could be a standardised fee, or one based on the vehicle value and/or fuel type.

We may not know this value upfront.

In some cases, we will receive a fee if you request further information from a subsidiary supplier even if you do not go on to make a purchase.

We are committed to extending our disclosures to ensure that you know when a referral fee is applicable and the amount if commission applies. Although this is a priority, it goes a step beyond the current legislation and is not currently live at the time of writing.

Treating customers fairly

We’re bound by the Financial Conduct Authority (FCA) to ensure we’re treating customer fairly.

Beyond providing a service that is worthy of your time and money, and that doesn’t stop once you’ve got the keys in your hands, this also demonstrates our desire to ensure you’re fully informed.

We commit to doing our bit to glamorously (yet frantically) waft away the smoke and mirrors, and to making the car buying process a more enjoyable one for more of you.

Far from being a means to sneak in more underhand income, commission allows us to control costs in ways that benefit buyers too.

Sometimes by enforcing price stability against the odds, others by managing demand.

Price stability

Where possible, we secure funding across various lenders for a single deal.

We have to agree to a volume with each, which can contribute to funder support income if applicable. But this also allows us to support more of you considering different underwriting requirements and to provide alternatives when applications are declined.

It also provides longevity if one funder meets capacity or pulls their rates early.

However, each funder will have different lease costs. We then vary our commission to stabilise and standardise the rates paid by each of you across the campaign.

Additionally, funder rate reviews are a frequent inevitability and one we often aren’t aware of until placing your order. Within reasonable scope, variable commission can allow us to honour the rates you’ve been quoted by accepting increased or decreased commission accordingly.

We win some, and we lose some. But this work behind the scenes is intended to maintain your trust and minimise disruption.

Managing demand

At times, the opposite is true, and we do need to enforce rate changes to manage demand.

This could be to stem sales rates to ensure enquiry levels reflect the resource available to offer the high levels of customer experience we champion.

Or to stimulate interest when a deal isn’t selling as well as we hoped.

Considering supply and demand, just like every other business out there.

Commission is our only means to influence rates once an agreement with a supplier and funder is in place.

Losing this flexibility not only affects our ability to remain competitive and respond to live market conditions. It will inevitably impact the continuity and equality of the deals we're able to advertise to you.

Increased transparency needn't mean reduced competitiveness.

In the right hands (and ours are perfectly manicured, don’t you know) and with the right controls (in our regulators we trust), commission is as much a source of customer value as it is a necessity for our own.

The official stuff

Still with us?

Blimey, know we’re engaged in a remote yet rapturous round of applause in your honour.

There’s just one final point to get through, and it’s another important one.

We hope it’s reassuring to know that we’re not accountable to our own want and whim. Instead, we have regulators who vet and verify our every move.

Their job is to ensure we’re functioning within our legal, regulatory and moral obligations to you. And also to protect us from unjust claims to the contrary.

That’s why you’ll see official disclaimers that prove as such:

Carparison Ltd trading as Carparison and www.carparisonleasing.co.uk is an appointed representative of Product Partnerships Limited which is authorised and regulated by the Financial Conduct Authority. Product Partnerships Limited FCA registration number is 626349 and its address is Second Floor, Atlas House, 31 King Street, Leeds LS1 2HL. Product Partnerships Limited’s permitted business is to act as a Principal for a network of Appointed Representatives who arrange regulated credit facilities for customers who are purchasing goods from them.