Car Finance Compensation Check

In recent years, the topic of car finance mis-selling has captured headlines with claims that millions of customers could potentially be entitled to compensation. For those who have entered into Personal Contract Purchase (PCP) or Hire Purchase (HP) agreements in the past six years, you could be eligible to claim for hidden commission mis-selling. At Claims Bible, our claims partners are available to help you understand your rights, build your claim and get the compensation you’re rightly entitled to. In this article, we’ll learn how to determine if you were mis-sold finance, and what steps are necessary to claim compensation.

What is car finance compensation?

Car finance compensation refers to the monetary settlement that customers can claim if they were mis-sold their car finance agreements, specifically under loan agreements such as Personal Contract Purchase (PCP) or Hire Purchase (HP) schemes. These two popular types of car finance options in the UK allow individuals to pay for a vehicle in instalments rather than up-front in a single payment. Compensation is typically sought when there has been a lack of transparency or unfair practices during the selling process, leading to potential financial loss or mismatched finance products for consumers.

How was car finance being mis-sold?

The source of car finance mis-selling stems from car dealerships offering sales staff discretionary commission on car finance contracts sold. These sales would often hinge on the interest rates that customers were being charged on the loans taken out. This gave resellers a targeted incentive to increase interest rates and sell more expensive loans to customers. This practice was banned by the Financial Conduct Authority in January 2021 to make car financing a more fair and affordable practice.

Mis-selling car finance often involves several practices that may not align with fair consumer standards. These can include not providing clear information about the financial implications, such as the total cost after interest, balloon payments in PCP agreements, or the financial consequences of exceeding mileage limits. Sales personnel may also fail to adequately explain the terms and conditions of the finance agreement, or wrongly suggest that the customer has a higher chance of approval for finance if they choose additional insurance products.

How do I know if I was mis-sold car finance?

There are a few telltale signs that you may have been mis-sold car finance, but the most effective way of knowing is by speaking with our claims partners at Claims Bible. They will look at the specifics of your situation and give you the best indication about whether or not you can make a successful claim. They will be looking for a few different things, such as a lack of transparency around the cost and terms of the loan. Other signs that you were mis-sold car finance include being sold a financial product that wasn’t suitable for your needs or if you were pressured to take the option offered. Deception is another red flag, as sales teams may have led you to believe that additional products such as insurance were compulsory for finance approval.

Can I make a car finance compensation claim?

If you believe you were mis-sold a car finance product under a PCP or HP agreement, you are entitled to make a compensation claim. At Claims Bible, we can team you up with our claims partners who can give you more information about the validity of your claim. If they agree with you and believe that you are eligible to make a claim, then they will be able to help start your claim for you.

What is the time limit for car finance compensation claims?

The general rule as outlined in the Limitation Act 1980 is that you have six years from the date the agreement was signed to make a claim. Alternatively, you have three years from the time you became aware (or should reasonably have become aware) that you were possibly mis-sold the finance.

What evidence do I need to make my car finance compensation claim?

In order to make a successful car finance compensation claim, you will need evidence to show that you were mis-sold finance. At Claims Bible, our claims partners will be able to help guide you through the evidence-gathering process to ensure your case is as strong as possible. Some of the main pieces of evidence used to support these claims include official documents for your finance agreement alongside any related paperwork. Correspondence between you and the finance company will also be useful, as will any financial statements showing the payments made.

How much compensation will I receive?

Compensation amounts can vary widely based on the specifics of the case, such as the nature of the mis-selling and the financial impact on the consumer. It generally covers any financial loss directly related to the mis-sold finance agreement. With the help of our claims partners at Claims Bible, we will look in-depth at your case to ensure you get all of the compensation you’re entitled to.

How long do car finance compensation claims take?

The duration of a compensation claim will depend on a few different factors such as the complexity of the case and the legal route taken. Direct negotiations with finance providers might resolve within a few weeks, but if the claim escalates to the Financial Ombudsman Service , it could take several months. The complexity of the case and the workload of the Ombudsman can affect this timeframe too.

How can I claim my compensation?

To claim the compensation you’re entitled to for mis-sold car finance, you must make a claim. Although this can be quite an involved process, with the support of our claims partners at Claims Bible, every step is simple and straightforward. Our partners will be able to help you gather all of the evidence you need to build your case. They will also guide your case through the most appropriate legal channels, such as working towards a settlement or advancing your case to the courts.

Car finance claims are temporarily paused while we appoint a new claim partner. You can still complain to your lender yourself for free — our complaint letter generator writes a ready-to-send letter in under a minute — and this page will be updated when claims reopen.