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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The FCA has recently banned UK car dealers from charging and pushing higher interest rates on PCP & HP deals.
If you have had a car on finance in the last 10 years you could be able to claim back £1000s from hidden commissions that were not disclosed within your finance agreement.
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.
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.
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 paid the final ‘balloon payment.’
The FCA concluded that they were ‘not satisfied that firms are complying with regulatory requirements.’
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.
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.
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.
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 is actually necessary and then have interest charged upon that higher number.
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.
It has been found that lenders often incentivize a broker to charge a higher interest by compensating them with a commission proportional to the interest they sell.
The estimated cost of this behavior for the customers is £300m annually.
An FCA consultation entitled: ‘Motor Finance discretionary commission models and consumer credit commission disclosure,’ found that Differences in Charge models are the most damaging to the customer which unnervingly consists of 95% of the 1000 agreements the FCA looked into.
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.
fill in your details above and we will email you the next steps and request for you to upload your finance agreement.
Once submitted our expert witness will review your finance agreement and within 3-5 days will be finished.
Once the report is finished our legal team will contact you to let you know the outcome.
It is then up to you if you would like to proceed on a no-win-no-fee basis.
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