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Were You Mis-Sold Car Finance?

Millions of people in the UK may have been mis sold car finance deals, you could be one of them!
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 your experience with car financing, including personal contract purchase (PCP) & Hire Purchase (HP) car finance

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Find out if you have been mis-sold your car finance deal now and if you are eligible for a no win no fee car finance claim.

'Millions of UK motorists may have been mis sold car finance,
FCA investigations have revealed.

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How Has Car Finance Been Mis-sold

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)

As a result, people have ended up with much more expensive deals than they realized, leading to huge debts they are unlikely to ever afford to pay off.

Many customers believed that their car or car finance was affordable but the reality of the costs involved was not made clear.

It has also been alleged that some companies misled customers by giving them false information and not disclosing key issues such as any penalties for early repayment.

Many companies also failed to offer clear information about the small print such as fees and any additional borrowing costs.

How has car finance been mis-sold
Evidence of car finance mis-selling.

Evidence of car finance misselling

Evidence of car finance mis-selling.

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.

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.

Vauxhall – Corsa – 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


The 8 main points of Motor Finance Mis Selling

1. The broker often gets a commission, which they keep a secret

It has been unveiled that lenders tend to conceal the existence of commission offered to their brokers. A mystery shopper exercise carried out in 2018 reviewed the processes followed by 122 retailers in their provision of Motor Finance. Of those 122 retailers only 11 disclosed to the customer that commission may be received by the broker for arranging the finance. This violates CONC requirements as it creates an unfair relationship between customer and lender.

2. The Difference in Charge commissions.

It has been found that lenders often incentivise a broker to charge a higher interest by compensating them with a commission proportional to the interest the sell. The estimated cost of this behaviour for the customers is £300m annually. An FCA consultation entitled : ‘Motor Finance discretionary commission models and consumer credit commission disclosure,’ found that Difference in Charge models are the most damaging to the customer which unnervingly consist of 95% of the 1000 agreements the FCA looked into.

3. Contracts are rarely adequately explained.

The mystery shopper exercise mentioned earlier which was carried out by the FCA also wanted to investigate whether or not lenders fully disclosed all the necessary information regarding the Motor Finance agreements to be made. The shoppers found that the concept of ownership of a car under PCP was frequently brushed over or poorly explained. 69% of the mystery shoppers were not made aware by the broker that they would not fully own the vehicle until they had payed the final ‘balloon payment.’ The FCA concluded that they were ‘not satisfied that firms are complying with regulatory requirements.’

4. Customers are misled with numbers.

Lenders are required by law to give an APR of a Motor Finance Agreement so the customer may compare products, however, they are then free to give an equivalent representation of the APR. A prevalent example comes in the form of flat rate interest. Flat rate interest is applied to the starting balance for the entire duration of the loan no matter how much of it is paid off. This means that as a percentage value, flat rate interest is very low compared to other types of interest while still providing the same returns. In failing to clarify to the customer this key detail of their interest rates, lenders are in breach of UK consumer credit law.

5. Ineffective credit checks.

There is concern over some dealers who are trying to get customers approved by second-string lenders if the customer has been declined by their primary lender. This may result in much higher rates as the finance company they may get approval from will probably specialise in sub-prime customers as they were not able to get a check from the main lenders.

6. The brokers haven’t been regulated.

It appears that an alarming number of PCP companies have seemingly been acting without regulation. They have been manipulating PCP’s to their own benefit at the cost of the consumer. Many brokers have been operating without the oversight of FCA regulators which is not only irresponsible but also illegal, this unfairly places the consumer in a very precarious position.

7. Unreasonably high interest rates.

The Difference in Charge agreements showed a direct correlation between broker earnings and higher customer interest rates. Only now are regulators clamping down on lenders to review their systems, revealing the fact that brokers have been earning higher commissions straight from the higher interest rates. The FCA warned that thousands of customers could be paying 50% more interest than necessary. This is also due to the consumers being made to take out more money than actually necessary and then have interest charged upon that higher number.

8. Unfairly charged fines and fees.

There are many different types of charges you can received through a mis sold PCP. One of the charges is often from the ‘Mileage Limit’ which if exceeded, the fee could be very steep. People are often not made aware of the exact details of the mileage limit so it becomes scarily easily to go over the limit and receive a charge. The other fee to look out for is the ‘Wear and Tear’ because although you may believe you have kept the car in good condition, the dealers may count smaller things you were unaware of as a part of this charge and again the fees won’t be small.

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
Mis sold car finance claims agreements land rover car

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.

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Discussion of opinion. with illustrations of people who were deb

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Questions you may ask about mis sold car finance claims

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 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.

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.

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

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.

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.

The timeline is unknown and can vary with case to case. The sooner you sign up, the sooner we can begin the auditing process. A normal timeline as an estimate would be around 3 to 12 months.

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.

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.

The average timeframe is between 8-16 weeks from the date of acknowledgement to a decision being made.

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.

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…

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


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


Discuss your claim details with our customer service experts.


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


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.

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.

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.


Vehicle finance agreements and Covid 19: guidance for firms

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