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Mis sold car finance explained
By Felix Hervey
The Devil in The Detail
The recently uncovered scandalous activities of many car dealers have had widespread implications after thousands of unfair deals were exposed. Car dealers have been found to advertise deals such as PCP’s as more desirable and cost-effective however it’s all just smoke and mirrors as the finer and more undesirable parts of the deals are hidden deeply in the small print.
What exactly is a mis-sold deal?
There are multiple ways in which a deal can be mis-sold by a dealer or lender. When making a deal the lenders must inform you explicitly about the deal you are about to undertake so that you understand the good, the bad, and most importantly, the ugly. The deal should be designed to suit your needs and work with your financial capabilities. Some examples of what may constitute a mis-sold deal are the following:
1) Higher risks involved than originally outlined.
2) Misleading extra costs.
3) Information that was never disclosed such as who owns the vehicle or other options that would have saved money for the borrower.
PCP Deals
PCP deals are the most common mis-sold car deals found. For a full explanation and understanding of PCP deals click here.A PCP (Personal contract purchase) is a type of deal which many have seem to have been convinced to choose by dealers. In fact, the influence from a dealer to pick a more expensive deal means they are taking advantage of the borrower, this is another possible avenue to pursue compensation through.
PCP’s typically work as a two-year contract where the borrower will pay the difference between the original value of the car when they first began borrowing it and the depreciated value of the car when the contract ends. If they want to buy the car and keep it they will have to pay a final expensive balloon payment. The issue with the PCP agreements is that the borrowers end up borrowing more money than necessary to cover the cost of the depreciation and then interest is charged upon that higher value. Therefore, over charging the borrower by sometimes thousands.
The biggest misconception about PCP’s to take note of though, is that PCP’s are a purchase not a lease, when you take out a PCP, you are borrowing the total value of the car minus your initial deposit.
What to do now?
You could be eligible for compensation if you believe you have been mis-sold a deal. Unfortunately, if you were made aware of all the aspects of the agreement such as the high risks and all the payments that were to be made, you are not suitable for compensation. It is through the failure of the lender to help the borrower to fully understand the agreement or failure to fully disclose it, that creates room for the borrower to take action.
Even if you have not lost any money you should still call the dealership and make a complaint to stop them from continuing this behaviour in the future.
If you believe that you are eligible for this type of compensation you should do the following:
- Collect all evidence and information you have on your car deal – concrete evidence is not necessary.
- Contact your dealer to complain and try to resolve the issue as you may reach a simple solution between the two.
- If no resolution is reached get in contact with us and we will review your case.
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Mis Sold Car Finance
Mis Sold Car Finance – Over 5 Million people in the UK may have been Mis Sold Car Finance deals, you may be one of them!! Start your claim HERE now!
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Mis Sold Car Finance Explained
Example 1
- A PCP car on a finance deal was not the best option, it would of worked out 40% cheaper if the customer had used a higher purchase agreement.
- The customer felt that they were pushed into making the wrong decision without complete understanding.
Mis-Sold Car Finance PCP Agreement