Bad Credit Car Finance Claim — Were You Steered Into a Higher Rate?
Scheme status (updated 5 August 2026): parts of the FCA motor finance redress scheme are temporarily suspended while the Upper Tribunal considers legal challenges. Lenders do not currently have to calculate or pay compensation under the scheme, the original decision and payment dates no longer apply, and no payment under the scheme is guaranteed. If the scheme proceeds, first payments are expected in 2027 at the earliest. Any dates mentioned below were set before the suspension.
If you had a poor credit history when you took out car finance, you may have been specifically targeted for higher-interest agreements that generated larger commissions for the dealer. This is one of the most significant forms of mis-selling within the PS26/3 scheme — and it disproportionately affected people who could least afford to overpay.
How Bad Credit Was Exploited in Car Finance
Under Discretionary Commission Arrangements (DCAs), dealers could set the interest rate on your finance agreement within a range set by the lender — and earn more commission the higher they pushed it. For customers with poor credit histories, dealers had additional cover for high rates because the customer had fewer alternatives and was less likely to question the terms.
This created a perverse incentive: the customers most financially vulnerable were systematically charged the highest rates, generating the largest commissions. The FCA’s own research confirmed that DCA commission arrangements led to higher rates being charged to customers who were more likely to accept them without challenge.
Does a Poor Credit History Affect Your Eligibility?
No. Your credit history at the time of the agreement does not affect your eligibility under PS26/3. The scheme covers the commission arrangement — not your creditworthiness. Even if you had:
- CCJs or defaults at the time
- A thin credit file or no credit history
- Been declined by mainstream lenders and directed to a specialist lender
- Paid a significantly higher APR than standard market rates
- Used a non-prime or subprime lender such as Moneybarn, Advantage Finance, First Response or Motonovo
— you are still eligible to claim under PS26/3 if your agreement was a regulated PCP or HP arranged between April 2007 and November 2024.
Non-Prime Lenders and PS26/3
Several lenders specifically targeted the non-prime market — customers with impaired credit — and are fully within PS26/3:
- Moneybarn — specialist non-prime lender, FCA-regulated, within PS26/3
- Advantage Finance — non-prime specialist, within PS26/3
- First Response Finance — non-prime specialist, within PS26/3
- MotoNovo Finance — non-prime and mainstream, within PS26/3
- Startline Motor Finance — non-prime specialist, within PS26/3
- Oodle Car Finance — used car non-prime lender, within PS26/3
If you used one of these lenders, the DCA rate data suggests you were particularly likely to have been subject to discretionary commission rate-setting. Complaining is strongly advisable.
How Much Could You Receive?
Because non-prime agreements typically involved higher loan values relative to the vehicle and longer terms, the compensatory interest element of the PS26/3 hybrid remedy can be significant. The national average is £829 — but customers who were charged significantly above-market rates on higher loan values often receive more.
Use our car finance claims calculator to estimate your payout based on your specific agreement details.
Related Pages
Frequently Asked Questions
I had bad credit and was told the high rate was normal for my situation. Does that mean I cannot claim?
No. Being told a high rate was normal for your credit profile does not exclude you from PS26/3. If the rate was set by the dealer under a DCA arrangement to generate commission — regardless of what you were told — you are eligible to claim.
I was rejected by mainstream lenders and sent to a specialist. Can I still claim?
Yes. Being directed to a specialist non-prime lender does not affect your eligibility. If the specialist lender was FCA-regulated and the agreement was PCP or HP between April 2007 and November 2024, you can claim.
My APR was over 30%. Is that a sign of mis-selling?
A very high APR is not automatically evidence of mis-selling under PS26/3 — it may reflect your credit profile. However, if the rate was set under a DCA arrangement where the dealer earned more commission for pushing the rate higher, that is compensable regardless of the headline APR.
I have since improved my credit score. Does that affect anything?
No. Your current credit position is irrelevant. The claim relates to what happened at the time the agreement was arranged.
You will be redirected to our partner’s website to complete your claim.
Think You May Have a Motor Finance Claim?
The FCA estimates average compensation of around £830 per eligible agreement, but eligibility and payment amounts vary. Some customers may receive nothing. Complaints about agreements started from 1 April 2014 should be submitted by 30 June 2026 to be considered under the earlier timetable. Different dates apply to older agreements. The scheme is currently subject to legal challenge, so dates and payment timings may change.
