Were You Mis-Sold Car Finance?

Millions of people in the UK may have been mis sold car finance.

It was found in a FCA report that car finance consumers may have been overcharged and deceived when arranging their car finance deals.

You may be eligible to claim car finance compensation if any of the below statements are applicable to you

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Find out in 2 hours if you have been mis-sold car finance  and able to make a no win no fee car finance claim today

Evidence of car finance misselling

The FCA’s findings in March 2019 of an inquiry revealed serious evidence of widespread unclear and excessive vehicle finance rates affecting millions of UK drivers.

Jonathan Davidson, Executive Director of Supervision – Retail and Authorisations at the FCA, has said “We found that some motor dealers are overcharging unsuspecting customers over a thousand pounds in interest charges in order to obtain bigger commission pay-outs for themselves. We estimate this could be costing consumers £300 million annually. This is unacceptable and we will act to address harm caused by this business model.

According to the Financial Conduct Authority (FCA), which conducted “mystery shopper” visits to 122 automobile dealerships, this is how it went…

  • The mis-sold car finance scandal has cost UK consumers an estimated £300,000,000 per year, according to the FCA.
  • Only 28% of car dealers informed customers about the consequences of missed payments.
  • The survey also revealed that dealerships frequently attempt to explain the “buy-back” option to consumers, but only 31% of dealers fully informed customers they don’t own the car at the end of the contract unless they pay off the balloon payment in full.
  • Mystery shoppers went to 122 car dealerships, and just 11 of them informed the shoppers that additional commission would be added to these kinds of offers.

How Has Car Finance Been Mis-sold

There are a number of methods for a dealer or lender to mis-sell a car on finance.

The lenders must communicate with you fully about the deal you’re going to take so that you can understand the benefits, drawbacks, and worst-case scenarios.

The arrangement should be tailored to your needs and operate with your financial capabilities.

Car finance has been mis-sold in the same way many other financial products have.

The main issues have been that customers were not given enough information to make an informed decision, they were not aware of all their options or the total cost of the finance is provided.

"If not properly managed, some of the commission arrangements in place could provide incentives for dealers to arrange finance at higher interest rates."

FCA final findings (Section 1.4)

There are a number of methods for a dealer or lender to mis-sell a car on finance.

The lenders must communicate with you fully about the deal you’re going to take so that you can understand the benefits, drawbacks, and worst-case scenarios.

The arrangement should be tailored to your needs and operate with your financial capabilities.

Car finance has been mis-sold in the same way many other financial products have.

The main issues have been that customers were not given enough information to make an informed decision, they were not aware of all their options or the total cost of the finance is provided.

The 8 main points of Car Finance Mis Selling

How much car finance compensation can I claim back if I was mis-sold?

If you have been mis-sold car finance, the amount of car finance compensation that you could be owed will vary depending on a number of factors.

This includes how much money you have already paid towards the purchase of your car, as well as how much commission was earned on the sale.

Generally speaking, if you can prove that you were not made aware of the commission being charged, or that the finance deal was unsuitable for you, you could be entitled to car finance compensation and make a no win no fee car finance claim.

Some motor dealers are overcharging unsuspecting customers over £1000 in interest charges in order to obtain bigger commission payouts for themselves. This is unacceptable.

Jonathan Davidson, director of supervision for retail and authorisations at the FCA.

How do i know if i was mis-sold car finance

There are a few ways that you can tell if you may have been mis-sold HP or PCP car finance. If any of the following apply to you, it is worth getting in touch with us:

– You were not made aware of the commission being charged on your car finance agreement

– The finance deal was unsuitable for you, and you were not advised of this

– You were pressured into taking out the car finance agreement

– The terms and conditions of the finance deal were not made clear to you

If you have any questions or would like more information, please do not hesitate to get in touch with one of our lawyers. They will be happy to help.

I’ve been doing this work for 38 years and, frankly, we were getting away with murder. We weren’t treating customers fairly and were, in effect, charging them to earn us money. The FCA’s ban means all the wheeling and dealing is over. It’s not trying to stop us from earning money – just from taking the p*ss.

Anonymous finance broker, speaking to Autocar
How do i know if i was mis-sold car finance

Don't get taken for a ride: how to avoid being mis-sold a car on finance

Car finance deals can be confusing, and it can be easy to end up with a deal that is not right for you. This is known as mis-selling, and it can leave you out of pocket and struggling to keep up with repayments.

Here are some tips to help you avoid being mis-sold car finance:

– Do your research: make sure you understand exactly what is involved in the finance deal before agreeing to anything.

– Ask questions: if there is anything you don’t understand, ask the lender to explain it to you.

– Get advice: if you are unsure about whether a finance deal is right for you, speak to an independent financial advisor.

– Know your rights: you have the right to walk away from a deal at any time, so don’t feel pressured into agreeing to something you’re not comfortable with.

 

Find Out if You Were Mis-Sold Car Finance For Free

Are you eligible for a no-win no-fee car finance claim?

Mis-Sold Car Finance PCP Sample Examples

A list of real-life scenarios to demonstrate how you may have been mis-sold a car on finance.

mis sold car finance claims for cars and motors 1

Example 1

  •  A PCP car on a finance deal was not the best option; it would have worked out 40% cheaper if the customer had used a hire purchase agreement.
  • The customer felt that they were pushed into making the wrong decision without complete understanding.

Audi – A4 – Manual

 

mis sold car finance claims for cars and motors 2

Example 2

  • The salesperson did not make it clear who would own the vehicle, whether it be the customer, the finance company, or the car dealership.
  • PCP interest was overcharged.
  • The customer did not receive alternative options from the dealership.

 BMW – 3 Series – Manual

 

mis sold car finance claims for cars and motors 3

Example 3

  • The salesperson did not fully explain they would receive a commission on the sale of the car.
  • The customer was mis sold their mileage estimation; the mileage was estimated at 9,000 per year when the dealer knew the customer exceeded this substantially.  

Mercedes – A Class Saloon – Manual

 

mis sold car finance claims for cars and motors 4

Example 4

  • The customer was not advised who would be responsible for repairs.
  • The vehicle broke down 6 months into the PCP finance agreement.
  • The car dealership would not pay for any repairs and left the customer with a large bill.

Ford – Mondeo – Manual

 

mis sold car finance claims for cars and motors 3

Example 5

  • PCP payments were unrealistic, no finance credit checks were carried out.
  • The customer was rushed into the finance agreement and assured payments would be affordable. 
  • The salesperson skipped through the car finance agreement (t&c). 

BMW – X5 – Manual

 

mis sold car finance claims for cars and motors 6

Example 6

  • The car dealership did not explain the interest properly to the customer.
  • Mileage was over charged mileage by 5,000 miles.
  • Customer was not provided with a range of options and felt pressured to take a PCP agreement.
  • PCP interest was overcharged.

Nissan – Quashqai – Manual

 

Reasons you may have been mis sold your PCP car finance agreement 

Investigation report conducted by the FCA in regards to the Mis Selling of Car Finance (PCP)

The information shown below comes from the Financial Conduct Authority (FCA) in which the FCA sent mystery shoppers to 122 car dealerships; these were their findings…

Speak To One Of The Team About Mis Sold Car Finance Claims

Discussion of opinion. with illustrations of people who were deb

Book a call with one of the team to see if you have been mis-sold your car finance & Eligible for a car finance claim.

Discussion of opinion. with illustrations of people who were deb

Questions you may ask about mis sold car finance claims

Yes, all car finance claims will be taken on a no-win-no-fee basis.

That means there will be no upfront fees when starting your claim.

A fee will only occur upon successful collection of a motor finance claim.

Upon collection of your car finance compensation, the legal team would charge 35% + Vat on successful collection.

A typical car finance claim can take up to 6-12 months, possibly longer.

This all depends on how quick your car financier takes to respond to the legal team managing your car finance claim.

When starting a car finance claim you will need a copy of your car finance agreement, proof of address, and also proof of identification like your driving license or passport.

  • Biometric Passport 
  • Drivers License
  • Bank or Building society or credit card statement (Less than 3 months old)
  • Utility bill – less than 3 months old

car finance agreement

At the top of your car finance agreement, it will either have “HP or PCP car finance agreement regulated b the consumer credit act 1974”.

Unfortunately at this time us and our mis-sold car finance solicitors will not take on PCH (a form of leasing).

It is mandatory for Car Finance Companies to keep records of all their customer’s transactions and dealings for at least 6 years.

You can certainly contact us in regards to checking but with commercial financing, it can be more difficult as the fiance was unregulated.

Once all correct documents have been received the legal team will instruct an expert witness to conduct a detailed report which will indicate if you have a claim and what they believe you have been mis-sold by.

You will usually receive the car finance claim report within 5-7  days.

Personal Contract Purchase (PCP) is effectively a personal loan which allows drivers to spread the payments for a vehicle over a long period, typically two or three years.

However, unlike a normal personal loan, you won’t be paying off the full value of the car and you won’t necessarily own it at the end of the deal (unless you choose to pay the final balloon payment).

PCP is one of the more complex financial products available to help you buy a car, but it can be broken down into three main parts: the deposit, the amount you borrow and the balloon payment.

The Financial Conduct Authority (FCA) regulates the financial services industry in the UK.

The FCA aim to make markets work well – for individuals, for business, large and small, and for the economy as a whole.

This includes car finance which covers several types of financial products you can take out when purchasing a car.

Dealers use PCP deals to draw in people who want to change their car every few years. 73% of new cars in 2014 were bought using PCP, making it the most prevalent financial product in the market.

If you paid off your Finance Deal more than 6 years ago, there may not be any available paperwork for you.

However, there have been cases in which claims have been made against cases of mis-selling over 20 years ago, often without paperwork.

Yes we will be able to deal with your motorbike claim as long as you still have your finance document you signed for.

The misconception around car finance is that the product being sold is a car.

This is only partly true. In fact, the main product that is being sold is a financial product – a loan.

The car is a red herring that has deflected the public eye away from this sector of credit broking meaning it has not been under as much scrutiny as, say, mortgages.

The concept of PCP itself is also relatively new.

If you are unable to remember your lender, we would not be able to commence the investigation unless we hold it in our own records.

The more details you can recall about your agreement, the more likely it will be that the finance company can locate and verify you against their systems promptly.

This will also help avoid requests for further information which can delay a decision being made.

I am very sorry to hear about your loss, but we are unable to continue with a further investigation unless you were also named on the account.


Dealers offering PCP finance will typically want around 10% of the value of the car as a deposit. Customers pay a deposit on the car they want and then make monthly repayments until the end of the term.

The amount you will have to borrow is based on how much value the finance company predicts the car will lose over the term of the deal (usually 24 or 36 months) minus the deposit you’ve put down.

You will pay this amount off during the deal, plus interest.

So, you are not paying off the full value of the car. Typical annual percentage rates (APRs) start from around 4%.

When the term ends, if you want to keep the car you need to make a lump sum payment (known as a balloon payment) in order to purchase the vehicle outright.

If you are not going to keep the car, you can hand it back without any further payments.

Alternatively, you can use any equity you have in the deal if the car has maintained more of its value than expected to put down as a deposit on a new vehicle, via a new PCP deal.

Many claims that are rejected initially go on to be overturned by the Financial Ombudsman Service, but the process can take several months.

Compensation will vary depending on your original contract but most claims involving PCP agreements will be worth several thousands of pounds.

Claims will be made against the lender of the finance only.

The broker of the PCP agreement is considered an agent of the lender so the responsibility is on the lender to ensure their brokers behave according to the standards set by the FCA.

The proof of identification allows us to confirm you are actually the policy holder.

Every PCP / Hire Purchase case varies in value due to different criteria. We will only be able to give you a figure when we have received your finance agreement and have completed the auditing process and determined a successful or unsuccessful case.

This is a concept that means that if your case is unsuccessful, no solicitors fees or auditing fees will be charged to you, so the process will cost you nothing. A fee is only charged in the instance of a successful claim, so you will never be out of pocket and have nothing to lose.

Yes, you have 14 days cooling off period once you sign the CFA. This means that if you change your mind during this period, we can stop at your request.

Find Out In 4 Easy Steps If You Have Been Mis Sold Car Finance

STEP 1

Check if you were Mis Sold Car Finance by completing our online form.

STEP 2

Discuss your claim details with our customer service experts.

STEP 3

Our expert team will establish whether or not you have claim.

STEP 4

Submit your application. 

Stay updated with all the latest news regarding mis sold car finance here in the UK.

PCP’s are already puzzling enough to the average consumer, but this befuddlement is only exacerbated by the media’s own failure to grasp the full idea of what a PCP is.

The recently uncovered scandalous activities of many car dealers have had widespread implications after thousands of unfair deals were exposed.

In March 2019, the Financial Conduct Authority (FCA) released a document publishing their final findings on motor finance, specifically PCP car loans.

What exactly is PCP car finance and how was it mis sold?

PCP stands for Personal Contract Purchase, it is a financial plan to help you obtain a motor for an average of 2-4 years by paying a monthly fee. 

The finance plan is set up in three forms of payment.

  1. You will make a deposit for the vehicle, this could be 10% of the vehicle’s retail price.
  2. Once you have paid a deposit the rest of the agreement is made up of monthly installments.
  3. After 2-4 years when the vehicle agreement comes to an end you will now have a decision to make, either pay a large balloon payment that can be up to 50% of the retail price of the vehicle or you simply hand back the vehicle and have nothing to pay, as long as the vehicle is in good condition and you did not exceeded over your mileage allowance .

 

mis sold car finance claims for cars and motors Balloon Payment Golf vw

See the example below to understand how it works. Imagine you sign up for a PCP over three years.

The vehicle costs £20,000 the finance company calculates that the vehicle will be worth at least £8,000 after three years. This is how it would look…

  • You pay a deposit for example £2,000 the rest will be obtaining a loan for the sum of £18,000.
  • The outstanding balance is now £18,000,  however it has been agreed that the vehicle will only be worth £8,000 at the end. You only repay £10,000 (plus the interest on the entire £18,000) over the three year period.
  • At the end of the agreement, you either pay the final £8,000 to keep the vehicle or have the option to hand the vehicle back.

 

Importantly, even if you return the car, you will still have paid interest for the full loan amount (£18,000) over the three year period.

Do you have a Mis Sold Car Finance Hire Purchase or PCP Agreement?
Below you will find some of the most common companies in the UK who offer PCP or Hire purchase Agreements!

Here at mis sold car finance we have compiled a list of companies that offer car finance

Mis-sold car finance in the news

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