Have you been mis-sold?
If you acquired a car, van, or motorcycle through PCP or Hire Purchase between 2007 and 2021, you may be eligible to receive significant compensation.
Mis-Selling in Car Finance: How It Happened
Before January 2021, most car finance lenders had agreements in place with brokers, known as “discretionary commission arrangements.” This meant that brokers (who were more often than not car dealers) were paid commissions based on the interest rates charged to customers. This meant that the higher the interest rate, the more commission the broker received. The hidden commission often meant higher Annual Percentage Rates (APR) for the consumer, as dealerships negotiated terms that were favourable to them while the consumer was oblivious.
As a result, car dealerships and/or brokers had a financial incentive to charge higher interest rates not necessarily in the best interest of the consumer who were unaware of these commissions. Hidden details within complex contracts left the consumer paying more than they should have for their vehicle.
The Financial Conduct Authority (FCA) stepped in and banned discretionary commission arrangements in January 2021. If you bought a car on finance before this date, you may have been affected by these unfair practices and entitled to claim compensation.
Understanding Common Types of Car Finance
When buying a car on finance, there are various options available:
Personal Contract Purchase (PCP)
Personal Contract Purchase (PCP)
Hire Purchase (HP)
Hire Purchase (HP)
What You Need to Know and How to Get Your Money Back
Car finance is a popular way to buy a new or used vehicle without having to pay the full price upfront and instead allows you to spread the cost through manageable monthly payments.
The car finance option has made it easier for consumers to buy vehicles but it does have its drawbacks. Recent years have seen an increase in the number of cases where consumers were found to have been mis-sold car finance deals, resulting in overcharges and unfair agreements.
Mis-sold car finance is more common than you might think and many people are unaware that could be entitled to claim compensation.
Below, we will explain the basics of car finance, why some agreements were mis-sold and how you can check if you’re eligible for a refund.
You Could Be Owed Compensation
You may have been mis-sold car finance if any of the following apply to you:
Lack of Transparency
You were not clearly informed about all the costs associated with your finance agreement, including interest rates and additional charges.
Undisclosed Commission
The broker or dealer did not tell you they were receiving a commission from the lender for setting up your finance agreement. Commissions were frequently not mentioned at all or hidden within the small print.
Pressure Sales Tactics
You felt pressured into signing the agreement without being given adequate time to review the terms.
No Affordability Checks
The broker did not conduct proper affordability checks to ensure the finance agreement was suitable for your financial situation.
Higher Interest Rates Than Expected
The interest rate on your finance deal was higher than expected and you were not offered the best available rate.
How to Check if You Were Mis-Sold Car Finance
Determining whether you were mis-sold a car finance agreement can be tricky but it’s important to start by reviewing your paperwork and understanding the terms of your deal.
Key steps you can take are:
Review Your Agreement
Look at the paperwork from your finance agreement, including the terms and conditions. Pay special attention to the interest rate, any fees and whether there is mention of a commission.
Step 1Check the Date of Your Agreement
If your finance deal was set up before January 2021, it is worth investigating further as discretionary commission arrangements were common practice at that time.
Step 2Were You Informed About Commission?
If your dealer failed to tell you that they would receive a commission for arranging your finance, this could be grounds for a mis-selling claim.
Step 3Affordability and Transparency
Consider whether you were given clear information about all your finance options and whether the broker conducted affordability checks to ensure the agreement was right for you.
Step 4Contact Us for Help
If you’re unsure whether your car finance was mis-sold, we can help review your agreement and guide you through the process of making a claim.
Step 5