Mis-sold car finance logo

Am I Entitled To Car Finance HP/PCP Compensation

By Jamie Scott

If you are a car finance owner, a car dealer may have earned a hidden commission. It’s important to be aware of this so that you can avoid being scammed by your dealership. This post will explain what hidden commissions are and if you have been affected and are entitled to car finance compensation or PCP compensation, basically the same.

Why there is a good chance you could be owed car finance compensation due to hidden commissions

First of all, let’s backtrack to march 2019.

The FCA (financial conduct authority) released a report where they led a 3-year investigation on how motor finance is sold to consumers in the UK…

the information shown below comes from the Financial Conduct Authority (FCA) in which the FCA sent mystery shoppers to 122 car dealerships;

Out of the 122 car dealerships visited in a recent mystery shopper sting, only 11 confirmed they would add a commission on these types of deals.

only 31% of dealers fully explained to the customer they will not own the vehicle at the end unless they pay a balloon payment in full.

28% of the car dealers failed to outline what would happen if customers missed payments.

The FCA has estimated that the mis-sold car finance scandal may have cost UK consumers £300 million per year.
The report goes into some detail on how these salespeople at the dealerships may have misled or mis-sold thousands of motor finance buyers.

Hidden Commission


Not only were the salespeople at the dealerships earning high commissions when they sold motor finance like PCP and hp but they were also allowed to dictate the rate of interest.

The higher the interest rate that was charged by the salesperson the more the salesman/saleswoman earned in commission.

As of January 25th, 2021 the FCA banned these commission structures as it does not put motor finance buyers first as a car salesperson is easily able to higher his earnings by overcharging the customer.

Why can I claim back car finance HP & PCP compensation?

This goes against the consumer credit act of 1974 as the car financier must include in the motor finance paperwork that all terms and conditions, fees, and payment must be fully explained throughout the agreement you signed for.

If your loan was mis-sold and had an undisclosed commission attached then the chances of receiving HP or PCP compensation is very high.

it is estimated that 92% of all motor finance packages have no inclusion of any commission that the salesperson or dealership earned.

this would deem anyone’s motor finance agreement as mis-sold as the car financier has failed to include the commission earned.

Other examples of how you might have been mis-sold car finance and entitled to car finance compensation

Here I have included out some more examples of how you may have been mis-sold car finance and possibly owed car finance compensation or PCP compensation.

1. I was given a car that I didn’t want

2. The salesman told me the car had low mileage, but it had high mileage

3. The dealer promised to fix my old car before I traded in, but they never did

4. The dealer said there were no hidden charges on the contract, but there were several fees added at the end of the purchase

5. They kept telling me this is a great deal and you’re getting such a good price for your new car when it’s not worth what they are asking for

6. Told me they would take care of all maintenance costs with their warranty package, then after 3 months called to tell me that my transmission needed replacing which wasn’t covered under warranty.

How much car finance compensation can I claim back?

How much commission can a car salesperson earn in a year

It can vary from £100s into the 10,000s of pounds depending on how many car finances deals you have taken out before January 25th, as that is when the FCA banned these commission structures in car dealerships.

Here is an example of someone who has potentially been mis-sold PCP finance and could get back up to £20,000 in PCP compensation.

an individual by the name of Mr. L took out a total of 12 PCP finance agreements over his lifetime with two different dealership chains before January 25th, 2021.

his claims are based on all transactions that were not fully explained to him, he was not aware of the hidden commissions.

the PCP finance company has to pay £1872 in PCP compensation for each agreement they have mis-sold Mr L.

if you take into account that this is a total of 12 agreements then Mr L will get back over £20000 from the car finance company.

This is just one example of how much PCP compensation you could get back if your claim was successful.

Tips to Avoid Being Mis-Sold Car Finance and Getting Your Money Back from the Dealer/Salesperson Who Sold You the Deal

Here are 5 tips that should help you from being mis-sold car finance in the future.

1. Ask for the contract before you sign it.

2. Make sure that you are getting all of the terms and conditions, fees and payment fully explained to you throughout the agreement.

3. Don’t feel pressured into deciding on the spot because chances are they are trying to close a deal so they can move on to someone willing to buy something.

4. If possible avoid car dealerships altogether as their only goal is to sell you a car which means they may be dishonest to do so.

5. If any terms or conditions have not been explained correctly or fully then there is a high chance that this sale has been mis-sold.”

There is a good chance you could be owed HP or PCP compensation due to hidden commissions.

These hidden commissions have been banned by the FCA, but it’s estimated that 92% of all motor finance packages don’t include any commission information at all.

If your loan was mis-sold and had an undisclosed commission attached then there’s a high probability that you’re entitled to some type of payment or refund from the finance company who sold you this deal if they refuse to compensate you on their own accord.

How much commission can a car salesperson earn in a year

How much commission can a car salesperson earn in a year

a car salesman can earn between £20,000 to £30,000+ a year in car finance commissions.

this means that some dealership chains are earning more than the majority of their employees with hidden commissions alone which is why they have started to ban these types of commission structures within their dealerships since January 25th, 2021.

It’s also possible for car salespeople to earn £40,000+ a year in commissions if they can sell multiple car finance deals.

this high earning potential is what leads most dealerships and their employees to be dishonest about these types of payment structures that have been banned by the FCA.

 It’s so important for you to ask questions and make sure that you fully understand what the car finance agreement entails before signing on any dotted line.

Why you have to be careful with a car salesman

Why you have to be careful with a car salesman (1)

When in a dealership with a car salesman or car dealers, there is always the chance that they will try and push you into deciding on the spot with any type of questions or requests.

they could be trying to do this for various reasons such as:

– They need to meet their sales target by close of business today before moving onto another dealership where the commission structures are less than the one they’re currently in.

– Need to close a deal so that they can move onto another customer who is willing to buy something and doesn’t ask too many questions about commission structures or payment plans etc…

In any case, there’s always the chance of being mis-sold if you do not fully understand what it is you are signing up for.

Be careful with any car salesman who is too pushy, aggressive, or trying to make you feel bad about delaying the purchase of a vehicle.

There’s always the chance that they may be dishonest to close a sale and if this happens then an inexperienced customer could end up being mis-sold which would lead to them having a solid case for car finance compensation.

How to check I was mis-sold my car finance agreement

How to check I was mis-sold my car finance agreement

before you sign the car finance agreement, make sure that it includes all of the fees and costs associated with buying a car from this dealership.

so if for example there’s an admin fee applied to your contract then make sure that this is mentioned in writing before signing any document or contracts etc… 

or else if they do not include it in writing then there’s a chance that you could be owed this fee due to it being undisclosed and therefore mis-sold.

It is also important for you or your solicitor to go back through the car finance agreement when everything has been signed before moving onto the paperwork stage of buying a vehicle from a dealership.

 If they try and charge any hidden fees or commissions on the day of signing for anything then you will be able to take them to court and claim car finance compensation.

This goes for any dealership whether it’s an independent dealer, main franchised dealer, or otherwise so always make sure that your solicitor checks over everything before having a contract drawn up.

Are PCP car finance compensation pay-outs higher than HP compensation?

Are PCP car finance compensation pay-outs higher than HP compensation

Sometimes in some cases, PCP car finance pay-outs can be higher as a PCP car finance deal has a lot more moving parts than HP.

Also to mention a PCP deal can earn a car dealership more in commission but it does vary on how the PCP and hire purchase agreement was taken out.

Car Finance Compensation Conclusion

if you have been mis-sold car finance and think that the dealer was only trying to sell a car because they get a commission from doing so then we strongly advise that you contact us on the phone number or fill out our online form.

we work on a no-win, no-fee basis and our team will be able to give you a free no-obligation quote on how much car finance compensation you could potentially get back.

Spread the word


Contact / Socail

Recent Posts

Follow Us