Get Compensation for Your Mis-Sold Car Finance in the UK
If you financed a car purchase in the UK within the last six years, you might be entitled to significant compensation due to mis-sold car finance. The Financial Conduct Authority (FCA) has uncovered widespread evidence of car dealers and finance companies not treating customers fairly, leading to many people overpaying for their vehicle finance. If you were given a car finance deal that was not properly explained, unsuitable for your budget, or misrepresented in any way, you could have a valid claim for compensation. Learn more about mis-sold car finance and how our specialist lawyers can help you navigate the claims process on a no-win, no-fee basis.
The Scale of Car Finance Mis-Selling in the UK
Mis-selling of car finance has affected hundreds of thousands of UK consumers in recent years. The FCA estimates that around 500,000 people may have been overcharged for their car finance due to discretionary commission arrangements between lenders and car dealerships. These arrangements incentivised salespeople to charge higher interest rates to earn more commission, without properly disclosing this to customers. In June 2020, the FCA (Financial service) took action by banning commissions linked to car finance, estimated to save consumers around £165 million a year.
| UK Car Finance Mis-Selling Statistics | Value |
|---|---|
| Annual UK car finance agreements (2021) | 2.4 million |
| Value of UK car finance advances (2021) | £39 billion |
| Percent of new cars bought on finance in the UK (2021) | 91% |
| Percent of used cars bought on finance in the UK (2021) | 42% |
| Estimated mis-sold UK PCP car finance deals per year | 560,000 |
| Average UK car finance compensation claim amount | £4,500 |
| Total UK car finance mis-selling compensation paid so far | £47.5 million |
Sources: Finance & Leasing Association, National Association of Commercial Finance Brokers, Financial Ombudsman Service
With over 90% of new cars and 40% of used cars in the UK being purchased through finance deals, the potential scope of mis-selling is enormous. The average compensation claim for mis-sold car finance stands at £4,500, with over £47 million already paid out to affected consumers. If you financed a car through a UK dealership or credit broker, it's crucial to understand what constitutes mis-selling and how to protect your rights.
Examples of Mis-Sold Car Finance
Mis-selling occurs when the car dealer, salesperson, or finance company fails to act in your best interests as a customer. Some common examples of car finance mis selling include:
- Lack of affordability checks: The lender did not properly assess your income, expenses, and ability to repay the loan without undue hardship.
- Unclear terms and costs: The total amount payable, interest rate, and additional fees were not disclosed and explained before you signed the agreement.
- Pressure to sign: You were rushed or pressured into signing the finance agreement without adequate time to read and understand the terms.
- Unsuitable add-on products: You were sold extras like GAP insurance or extended warranties that were not necessary or appropriate for your needs.
- Vehicle misrepresentation: The dealer misled you about the car's mileage, condition, service history, or value.
- Undisclosed commission: The salesperson or dealership received a commission for arranging your finance deal at a higher interest rate, without informing you of this conflict of interest.
If any of these situations sound familiar, you may have been mis-sold your car finance. It's important to gather all relevant paperwork, including your finance agreement, correspondence with the lender or dealer, and proof of payments. These documents will be essential evidence for your mis-sold car finance claim.
Types of Car Finance Eligible for Mis-Selling Claims
All types of car finance agreements can be affected by mis-selling, including:
- Hire Purchase (HP): A secured loan where you make fixed monthly payments and own the car at the end of the term.
- Personal Contract Purchase (PCP): PCP finance is very similar to HP, but with lower monthly payments and a larger optional final payment if you want to keep the car.
- Personal Contract Hire (PCH): Also known as car leasing, where you make monthly payments to use the car for an agreed term but never own it.
- Conditional Sale: A type of secured loan where ownership passes to you once all payments are made, but the lender can repossess the car if you default.
- Personal Loans: Unsecured loans used to purchase a vehicle, often arranged through the car dealership.
Regardless of the type of finance, if you believe the agreement was not arranged transparently or you were misled in any way, you can pursue a mis-selling claim. The UK statute of limitations for financial mis-selling is six years from the date of the agreement or the date you discovered the issue, so don't delay seeking legal advice.
Signs You Could Claim for Mis-Sold Car Finance
To determine if you may have been mis-sold car finance, ask yourself these key questions:
- Did the car dealer or finance company fail to properly assess your ability to afford the repayments?
- Were the terms of the agreement, such as the total cost, interest rate, and fees, not clearly explained to you?
- Did you feel pressured by the salesperson to sign the agreement without having time to review it thoroughly?
- Were you sold add-on products that you didn't want, need, or understand?
- Was the car misrepresented to you in terms of its mileage, condition, history, or value?
- Have you struggled to keep up with the monthly finance payments or found them higher than expected?
- Did the dealer fail to disclose that they were earning commission on your finance deal?
If you answered "yes" to one or more of these questions, you might have a valid mis-sold car finance claim. The next step is to seek professional legal advice to assess your case and guide you through the claims process.
What to Expect When Claiming Mis-Sold Car Finance Compensation
The process of claiming compensation for mis-sold car finance typically involves these key steps:
- Seek legal advice: Contact a law firm or claims management company that specialises in mis-sold car finance to discuss your case. Most offer a free initial consultation to assess your claim's eligibility and viability.
- Gather evidence: Your legal representative will help you compile the necessary documentation to support your claim, such as the finance agreement, correspondence with the lender or dealer, proof of income, and payment records.
- Submit a formal complaint: Your lawyer will draft a formal complaint letter outlining how you were mis-sold and the compensation you're seeking. They will submit this to the car finance provider and handle all further correspondence on your behalf.
- Await a final response: The finance company must investigate your complaint and provide a final response within eight weeks. They may accept fault and offer compensation or reject the claim if they dispute mis-selling occurred.
- Escalate or settle: If you receive a satisfactory compensation offer, your lawyer will arrange settlement. If the offer is insufficient or your claim is rejected, you may need to escalate the matter to the Financial Ombudsman Service (FOS) for an independent review. The FOS can order the finance company to pay compensation if they find in your favour.
The exact amount of compensation you could receive for mis-sold car finance will depend on factors like the total cost of the agreement, the financial losses you suffered, and any non-financial impacts like distress and inconvenience. Recent data from the Financial Ombudsman Service shows that the average compensation award for mis-sold car finance is around £4,500, but individual claims can range from hundreds to tens of thousands of pounds.
Most mis-selling claims are resolved within 8-12 weeks from submitting the formal complaint. However, complex cases requiring FOS intervention or court action may take longer. Your legal representative will keep you updated on the progress of your claim and fight for the maximum compensation possible.
The Benefits of Using a Mis-Sold Car Finance Claims Specialist
Pursuing a mis-sold car finance claim can be daunting, especially when going up against large financial institutions and car dealerships. That's why many affected consumers choose to work with a specialist law firm or claims management company to handle their claim. The key advantages of using a professional service include:
- No Win, No Fee representation: You only pay if your claim is successful, with no upfront costs to start the process.
- Expert knowledge and experience: Specialist lawyers have a deep understanding of the laws and regulations surrounding car finance mis-selling and know how to build a strong case for compensation.
- Full complaints handling: Your legal representative will handle every aspect of the claims process, from gathering evidence to submitting the complaint and negotiating with the finance company.
- Higher success rates: Claims management companies like Claim For My Car have a 98% success rate on mis-sold car finance claims pursued, recovering millions in compensation for clients.
- Faster resolution: Experienced claims handlers know how to efficiently progress your complaint and can often achieve a quicker resolution than if you were to handle the claim yourself.
- Peace of mind: Letting a professional handle your claim takes the stress and hassle out of the process, allowing you to focus on moving forward.
If you believe you may have been mis-sold car finance, don't wait to seek expert advice. Most claims specialists offer a free initial consultation to assess your claim, so you have nothing to lose by exploring your options.
Start Your Mis-Sold Car Finance Claim Today
If you financed a car purchase in the UK within the last six years and feel that the agreement was not properly explained, unsuitable for your circumstances, or misrepresented in any way, you could be owed significant compensation. Don't let car dealers or finance companies get away with mis-selling practices that leave consumers out of pocket.
At Claim For My Car, our specialist mis-sold car finance lawyers are ready to fight for the compensation you deserve on a No Win, No Fee basis. We have a proven track record of success, recovering millions for our clients to date with a high success rate on claims pursued.
To start your mis-sold car finance claim, simply complete our online enquiry form or call our friendly UK team for a free, no-obligation consultation. We'll assess your case and, if we believe you have a valid claim, will guide you through the entire process of recovering your compensation.
Don't delay - the sooner you start your claim, the sooner you could receive the compensation you're owed. Check your eligibility with Claim For My Car today and let our expert team handle the rest.
Mis-Sold Car Finance FAQs
How do I know if I was mis-sold car finance?
You may have been mis-sold car finance if the dealer or lender failed to properly assess your affordability, did not clearly explain the terms of the agreement, pressured you into signing, sold you unsuitable add-on products, or misrepresented the vehicle. If you're unsure, contact a claims specialist for a free assessment of your case.
Can I claim mis-sold car finance compensation if I've already paid off the agreement?
Yes, you can still claim compensation for mis-sold car finance even if you have finished making payments. The six-year time limit starts from the date you took out the finance or the date you discovered the mis-selling.
Will claiming for mis-sold car finance affect my credit score?
No, making a mis-sold car finance claim will not impact your credit rating or appear on your credit file. You can pursue a claim without worrying about negative consequences for your credit score.
How much does it cost to make a mis-sold car finance claim?
Most law firms and claims management companies offer No Win, No Fee representation for mis-sold car finance claims. This means you only pay if your claim is successful, with no upfront costs to start the process. If you win, the fee is typically a percentage of the compensation recovered.
How long does a car finance mis-selling claim take?
The average mis-sold car finance claim takes 8-12 weeks from submitting the formal complaint to receiving a final response from the lender. However, cases that require escalation to the Financial Ombudsman Service or court action may take longer. Your claims handler will keep you updated on the progress of your claim. If your final response is received between 12 July 2023 and 20 November 2024, you will have 15 months to refer your complaint to the FOS.
Can I claim if I was self-employed when I took out the car finance?
Yes, you can claim for mis-sold car finance regardless of your employment status at the time of taking out the agreement. The lender still had a duty to properly assess your ability to afford the repayments, regardless of whether your income came from employment or self-employment.
What if I've missed payments or defaulted on the car finance agreement?
Falling behind on payments or defaulting does not disqualify you from making a mis-sold car finance claim. In fact, unaffordable monthly payments are a common sign that the finance may have been mis-sold to you. Speak to a claims specialist to assess your options.
References
- [1] www.fca.org.uk
- [2] www.fla.org.uk
- [3] www.nacfb.org
- [4] www.financial-ombudsman.org.uk
