Misold PCP Car Finance

Misold PCP Car Finance

If you bought a new or used car in the last 10 years on a finance agreement then you may be entitled to claim compensation due to hidden fees. Check if you’re eligible to make a mis-sold car finance claim now.

Mis sold car finance

What is a mis-sold car finance agreement? 

Most people buying new or used cars sign up to what is known as a Personal Contract Purchase (PCP) financial plan. It has been common practice for the salesperson to receive a large commission from the lender finance company in return for signing the customer up to the PCP finance agreement. Quite often customers are not told about the amounts of commission paid. Commission which is increasing the cost of their car.

Government-backed watchdog, the Financial Conduct Authority (FCA), has recently banned car finance deals where the car dealers and their sales teams could earn more commission if customers were signed up to a more expensive PCP. This would often happen without the buyer even knowing what commission the sales team was getting. This is known as a ‘secret’ or ‘hidden commission’ and meant that customers were unfairly paying more than they should. Some people now have unaffordable car finance bills due to the pandemic.

If you bought a new or used car on a PCP finance scheme, you may be eligible for compensation due to a form of financial mis-selling, hidden commission. 

mis sold car finance

What is a secret/hidden commission?

This is where the car dealer sells you a finance package for the car but does not tell you that they are getting a commission or just how large the commission they are getting is. Most customers expect the salesperson or dealership to make their money on the sale of the car, but they do not realise that they may also be getting a commission from the finance company for the PCP finance agreement that goes with it meaning that the customer is potentially paying more than they should.
Because of the high risk of there being a conflict of interest between the customer and the car dealer (the dealer recommending finance products based on the amount of commission as opposed to what is best for their customer), and to ensure full transparency for their protection, the exact amount of this commission should be disclosed to the customer.
If the payment of commission and the amount of that commission has not been explained, then the customer can claim compensation for mis-sold PCP car finance.

If you bought a car on finance and were not told about the amount of commission that the dealership or salesperson received from the company providing the finance plan, then you may be able to claim compensation for PCP mis-selling.
Time limits can apply and so anyone wishing to bring a claim should do so without delay.

Mis-sold PCP Car Finance Claims FAQs

How do I know if I have been mis-sold car finance?


Warning signs of potential car finance mis-selling include:

  • The car salesperson told you their finance was the ‘best option’ rather than encouraging you to shop around or giving you a range of alternative options.
  • The salesperson did not give you information about any commission that they were getting from the finance company for you signing up to the agreement.
  • You were not told exactly how much commission they would get from the finance company.
  • The car finance company was not transparent about the terms and conditions of your contract. This can happen if they don’t provide you with a copy before signing, or make it difficult to understand what’s on offer when explaining things verbally over phone calls.
  • You were not given the opportunity to shop around for a better deal. A car finance company should always present you with at least two options, and allow time before signing anything so that they can compare them on your behalf – this is called “competing quotes.”
  • It was not clearly stated who was responsible for dealing with the car repair. If you’re not told who will be responsible for the car’s maintenance, then it is likely that this has been left out of your contract.
  • You were given a loan with an interest rate higher than advertised or agreed to in person or by phone.
  • You were not given information about how to avoid paying early redemption penalties when selling or trading-in of vehicle and/or repayments if sold as part exchange for another new purchase.
  • The dealer didn’t explain who owned the vehicle in some instances. Some people have been found to be working with a third-party firm, not actually at the car dealership.
  • The commission aspect of the sale was not correctly explained, or the customer was not told that they would have to pay a fee for this service.
  • You were not told about the length of time you would be paying for or what happens if your circumstances change. You may have been given a loan that is unsuitable to meet future financial needs, such as when interest rates are likely go up in coming months/years and it’s more expensive than anticipated.
Explain the mis-sold car finance process.How much compensation can I claim for mis-sold car finance?

This depends on many factors including the wording of the finance agreement, the interest rates that were charged, the amount of finance and how long ago the PCP finance agreement was signed. However, you could be entitled to thousands of pounds in compensation.
If you think that you have been mis-sold car finance, get in touch with our mis-selling team and we can discuss your claim and what it might be worth.

How long will my mis-sold car finance claim take?

This varies from claim to claim. If the dealership and/or the finance company accepts responsibility for the alleged PCP mis-selling and agrees to put things right, then a compensation claim can take just a few months. If the allegations are disputed, then the claim could go to the Financial Ombudsman Service (FOS), where the case could take anywhere between 12 to 18 months to conclude.
If starting court proceedings is the best option, then that process again could take somewhere between 12 and 18 months.


What will it cost to make a mis-sold car finance claim?

It will cost you nothing to make an enquiry and once our team has reviewed your potential case and if we feel it suitable, then we will enter into a no-win-no-fee agreement. That means, if the case is unsuccessful, we will not charge for the time we have spent on the case.
‘Secret/hidden commission’ car finance mis-selling claims can be very complex. Our team of specialist lawyers has many years experience of dealing with a wide range of financial mis-selling cases.
Our lawyers are very familiar with the regulatory framework and the various financial institutions involved in these cases, such as the FCA and FOS. They are also very experienced in taking cases to court if necessary, to ensure that clients get the compensation they are owed.

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