Hire Purchase Car Finance Claims 2026 — HP Compensation Guide
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.
Hire purchase (HP) is one of the most common ways to finance a car in the UK — and it is fully covered by the FCA’s PS26/3 motor finance redress scheme. If your HP agreement was arranged between 6 April 2007 and 1 November 2024, and the dealer received an undisclosed commission from the lender, you may be owed compensation averaging £829 plus interest. HP and PCP agreements are treated identically under the scheme.
What Is Hire Purchase?
Hire purchase is a type of car finance agreement where you pay for a vehicle in fixed monthly instalments over an agreed term, typically two to five years. Unlike PCP, there is no optional balloon payment at the end — once you have made all your payments, you own the car outright.
Under an HP agreement the finance company owns the car until your final payment is made. There are no mileage restrictions and the interest rate is fixed for the full term. HP has traditionally been more popular than PCP for used car purchases — which means HP claims often involve older vehicles with longer agreements, stacking up more compensatory interest over time.
Why HP Agreements Are Covered by PS26/3
The FCA’s investigation found that Discretionary Commission Arrangements (DCAs) and other forms of undisclosed commission were used across both PCP and HP agreements. Under a DCA, the dealer acting as credit broker could set your interest rate anywhere within a lender-defined range — and the higher they set it, the more commission they earned. This happened on HP agreements exactly as it did on PCP.
The FCA banned DCAs on 28 January 2021. The PS26/3 redress scheme covers HP agreements from 6 April 2007 to 1 November 2024 — the same window as PCP. See our full guide: What Is a Discretionary Commission Arrangement (DCA)?
HP vs PCP — Same Claim Rights
- HP: You own the car at the end automatically — no balloon payment, no option to return
- PCP: Optional balloon payment at the end — buy, return or part-exchange
- HP: Higher monthly payments, no mileage restrictions
- PCP: Lower monthly payments, mileage limit applies
- Both: DCA mis-selling applies equally — same PS26/3 scheme, same average £829 payout
Are You Eligible?
You may be eligible if your HP agreement was between 6 April 2007 and 1 November 2024, was arranged through a dealer or broker in your personal name, and was for personal use. You can still claim if you have paid off the agreement, sold the car, or no longer have the original paperwork.
The following are not covered: leasing or contract hire agreements, limited company agreements, interest-free (0% APR) deals, and agreements signed on or after 1 November 2024.
How Much Could You Receive?
The FCA-confirmed average payout is £829 per eligible agreement plus compensatory interest. The calculation uses the same Hybrid Remedy as PCP — the average of your estimated interest overpayment and the commission paid to the dealer, plus Bank of England base rate plus 1% per year (minimum 3%) added from the date of the agreement to the date of payment.
Higher loan amounts, higher interest rates, older agreements and premium vehicles all push the payout above the £829 average. Multiple HP agreements each generate a separate claim. See: How Is My Compensation Calculated?
Frequently Asked Questions
I’ve already paid off my HP agreement. Can I still claim?
Yes. The claim relates to how the finance was sold at the outset, not whether the agreement is still active.
My HP was for a used car — does that matter?
No. The scheme covers both new and used car HP agreements equally.
I had both HP and PCP agreements at different times. Can I claim for both?
Yes. Each eligible agreement is a separate claim and a separate potential payout. See: Multiple Car Finance Agreements
I do not have my original HP paperwork. Can I still claim?
Yes. Claims Bible can trace HP agreements using your name, date of birth and address history. See: Claiming Without Paperwork
My HP lender has gone bust. Can I still claim?
Possibly. See: Car Finance Claim If Your Lender Has Gone Bust
Related Guides
Hire Purchase vs PCP — What’s the Difference?
Multiple Car Finance Agreements
How Is My Compensation Calculated?
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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.
