What are mis-sold car finance claims?

Car finance (hire purchase or personal contract purchase) agreements can be complex, and the Financial Conduct Authority (FCA) has recently found that commission was paid on 95% of contracts taken out. This in itself isn’t necessarily a bad thing – however some commission was ‘hidden’ in the contract.

This refers to a practice in which car dealers and salespeople could earn more commission if customers were sold more expensive contracts, and the customers themselves were unaware of the commission. As a result, the contracts they have entered into may have had hidden charges or higher rates of interest.

When customers take out car, van or motorbike finance contracts, it is essential they are given the information they need to determine whether the contract they are entering into works for them and is financially valid. If you have taken out a PCP or HP contract where information has been withheld, or purposefully confused or hidden, you may have been mis-sold, and are therefore entitled to make a claim.

Enter your details to find out if you are eligible to claim compensation

Can I make a car finance claim?

Taking out a car finance agreement is a significant commitment, and if you haven’t been given the information and transparency you need to make the right choice, you are entitled to make it right.

If you feel you’ve been mis-led or kept in the dark about discretionary commissions or additional costs that have inflate the price of your contract, you may be eligible for compensation.

How do I know if I've been mis-sold car finance?

It can be difficult to know whether you have been mis-sold car finance. The FCA has warned that you may have been mis-sold PCP or HP finance if any of the following are true:

• You bought a car under a finance scheme (such as a hire purchase or PCP agreement) before 28 January 2021
• There was a discretionary commission arrangement between your lender and broker
• You were not aware of the commission being made by the dealership
• You were not made aware of the additional costs you could incur through your finance agreements, such as charges for damages.

If you have been affected by any of the above, or felt you were pressured into taking out car finance with your dealership, you may be eligible to make a claim.

How do I check if I was mis-sold car finance?

Understanding whether your car finance loan was mis-sold can be tricky, and it can be difficult to know where to start. At Slater and Gordon, we believe that everyone affected by mis-sold car finance should have the opportunity to claim their refund, without the headache. That’s why we’ve made it straightforward – to check if you’re eligible for a car finance refund, simply enter your registration number and we’ll let you know if you’ve got a claim.

How much can I claim for mis-sold car finance?

Each claim will be different, though it is thought that the average value of a mis-sold car finance claim could be roughly £1,600 – with some expected to go much further.

The value of a mis-sold car finance claim will depend upon the total value of the contract, the amount of interest you paid, and the value of any hidden charges. This means that some could be owed thousands in compensation.

To find out how much you could be owed, check your vehicle registration here.

Which finance companies are being investigated for mis-sold car finance?

There are a number of finance companies suspected of mis-selling car finance. Some of the lenders being investigated include:

• Black Horse
• Lloyds Banking Group
• Santander
• Close Brothers
• Barclays Finance

If you have taken finance out with any of the lenders above, you could be eligible to receive compensation. It is also worth noting that this list is not exhaustive; if you think you have been mis-sold finance by another provider, it is worth getting in touch and finding out if you’re eligible.

How long does a mis-sold car finance claim take?

The time it takes to finalise a mis-sold car claim can vary from case to case, as it will often depend on how quickly your car dealer or credit broker accepts they are responsible. If liability is accepted quickly, cases can be wrapped up within months. Where liability is disputed, this can take much longer.