Financial watchdog, the FCA, will ban car finance commission deals where the salesman gets more cash if he signs you up to an expensive plan.
As things stand, some car dealership and motor finance brokers are paid based on the interest rate drivers are charged.
That means brokers get better rewards for signing you up to worse deals.
So the FCA banned it - with the new rules coming into force on 28 January 2021.
FCA interim chief executive Christopher Woolard said: "By banning this type of commission, where brokers are rewarded for charging consumers higher rates, we will increase competition and protect consumers.
"We estimate that consumers could save £165 million because of today’s action."
The FCA said on a typical motor finance agreement of £10,000, increasing commission under a Reducing Difference in Charges (DiC) model would mean the customer pays £1,100 more in interest over a 4-year long agreement.
That's £275 extra a year - or an increase of around 50% in interest costs.
However, in a flat fee models this disappears altogether.
The even better news is that this ban will impact brokers selling every finance deals - not just motor finance . These changes will also come into force on 28 January 2021.
Alex Buttle, director of car selling comparison website Motorway.co.uk, said: “The FCA’s decision to crackdown on how dealers make commission from car finance is timely."
He added: “Some unscrupulous car dealers have been incentivised to pressure-sell car finance products which they know offer expensive rates that do not match the best deals available."
But Sarah Nield, financial services risk and regulation director at PwC, said the move to ban commission linked to interest rates on loans could push up costs elsewhere for buyers.
She said: "Given the largest commissions received by brokers tend to come via the models set to be banned, it will be interesting to see how lenders, brokers and dealerships react.
"Although we expect firms to comply with the spirit of the changes, it could result in unintended consequences including increased flat fee commission payments, car prices and bundled product costs."
