What Is Mis-sold Car Finance?
You may have been mis-sold car finance if you received poor advice about your financing options or if you were not sufficiently made aware of the various commissions being charged within your agreement.
A recent Financial Conduct Authority (FCA) investigation discovered widespread evidence of mis-selling on all types of vehicle financing options.Unknown to customers buying vehicles, lenders systematically incentivised brokers and car dealers to charge their customers higher interest rates so they could receive higher commissions themselves.
As one car dealer openly admits in a recent article, “frankly, we were getting away with murder. We weren’t treating customers fairly and were, in effect, charging them to earn us money.”
Another dealer said their agreements
Mis-sold PCP Claims
Common Mis-sold PCP issues in the UK include the following:
- Mis-selling was discovered on all motor vehicle types, including new and used cars and vans under all vehicle financing options such as personal contract hire (PCP), hire purchase (HP), Contract hire or a car loan.
- As the UK’s leading consumer law firm with an extensive track record of success, we are your preferred legal partner in reClaiming compensation on your behalf.
- Find out today if you have been the victim of undisclosed commission payments between brokers and lenders when using finance to purchase a new or used vehicle.
So, how may I have been mis-sold the PCP deal?
You can end up paying a huge amount more in interest than you would on a Hire Purchase contract. Many dealers do not make it clear that the balloon payment at the end effectively makes it an interest-only loan that isn’t paid throughout your agreement. Therefore, the interest builds up much more quickly. The interest bill can be huge if you decide to buy the car outright later on.
There is usually nothing wrong with the PCP deal - it all comes down to how your dealer sells it to you. Dealers have been known to discuss the profit you can make from PCP deals, but profit is very much the wrong term to use. This ‘profit’ is just the money you have already paid to cover how much the dealer expected the car to depreciate - you have actually borrowed more money and paid more interest than necessary.
How Do I Know If I Have Been Mis-sold A Car Finance Loan?
You can Claim for any mis-sold car finance agreement that you may have entered into in the last ten years. We will be able to review your agreement and tell you instantly if you have been mis-sold and if commissions have been unfairly manipulated. We will let you know how much you may be able to Claim if we see evidence of this in your agreement. Don’t worry if you can’t find the agreement or remember who the lender or dealership was. We can find your agreement on just the name of the company you made the payments to. You should be able to find this information on your old bank statements. Additionally, car finance companies must keep all contractual agreements with their customers for at least the last six years. The burden of proof is on the lender to show that they acted legally in all aspects of the process.
How Do I Know If I Can Make A Claim?
You may be entitled to Claim compensation for mis-sold car finance if the answer is no to any one of the following
It’s the company’s responsibility you purchased your vehicle from to show that they did all of the following adequately. If they can’t prove they did all of them, you’ll be entitled to Claim compensation
How Do We Know Mis-Selling Has Been Taking Place In Car Dealerships Across The UK?
The FCA sent mystery shoppers to 122 car retailers throughout the UK to discover:
- Out of the 112 retailers, only 11 told their customers that the dealership might receive a commission for arranging the deal.
- Only 31% of brokers explained to PCP customers they do not own the car until all sums (including a balloon payment) have been paid.
- Just 28% of brokers disclosed the total amount payable and explained the consequences of a missed payment or withdrawal from an agreement.
- On a typical motor finance agreement of £10,000, a customer may have been charged £1,100 more in interest through a PCP than through a different financing plan.
How Much Could I Claim For Being Mis-Sold Car Finance?
It is estimated that the average amount of compensation for a mis-sold car finance compensation Claim is around £1,100. In some cases, the amounts can be considerably higher.
The exact amount you may be able to Claim will be dependent on several factors. These include;
- The size of the loan. The larger the loan, the more you'll be able to Claim.
- How long ago you signed up for the loan. The longer the loan period, the more you'll be able to Claim.
- What interest rate you were quoted, and how much difference there is between the rate quoted and the rate you should have been quoted.
In some circumstances, we may be able to Claim back the optional extras you may have added to your agreement, such as insurance, tax, maintenance, breakdown cover, and servicing.
About FCA
Important information and links related to the mis selling of car finance (PCP agreements)
Below are some useful links in regards to mis sold car finance
FCA report into the mis selling of car finance (PDF)
In March 2019 the FCA released its final findings on the mis selling of pcp agreements.
https://www.fca.org.uk/publication/multi-firm-reviews/our-work-on-motor-finance-final-findings.pdf
Vehicle finance agreements and Covid 19: guidance for firms
https://www.fca.org.uk/publications/finalised-guidance/motor-finance-agreements-and-coronavirus-temporary-guidance-firms
Frequently asked questions
