What does car finance mis sold mean?

Mis-selling in the car finance industry, often labeled as “car finance mis sold,” happens when providers don’t fully disclose crucial product details, causing customers to overpay. This issue has impacted thousands of agreements, resulting in car owners not receiving the best financial terms available. If you suspect you’ve been affected by such mis-selling, use our mis-sold car finance checker today. Many providers have not informed customers about key aspects of their agreements, potentially entitling them to claims, including:

• Excessive interest rates.
• Commission arrangements between dealers and lenders that inflated the cost of borrowing.
• The total cost of the vehicle compared to other finance options.

The Role of Discretionary Commission Arrangements (DCA)

A major issue within the car finance mis sold landscape arises from what is known as a Discretionary Commission Arrangement, or DCA. Under these arrangements, dealers had the discretion to set the interest rates customers paid, with higher interest rates leading to larger commissions for the dealers. This led to significant financial harm for unsuspecting customers, who were often unaware of the conflict of interest.

In 2021, the Financial Conduct Authority (FCA) banned DCAs in motor finance. They found this practice led dealers to inflate interest rates. However, customers who took out car finance between 2007 and 2021, when DCAs were common, may still be eligible to reclaim mis-sold finance.

Key Lenders Involved in Mis-Selling

• MotoNovo: Facing claims of around £209 million, MotoNovo Finance was one of the major lenders operating under DCAs. The company allowed dealers to set interest rates, often leading to customers facing unfair charges.
• Black Horse: Part of Lloyds Banking Group, is a major player in mis-sold car finance claims. Estimates suggest that Black Horse faces claims totaling £624 million.
• Close Brothers: This lender also utilised DCAs, allowing brokers and dealers to hike up interest rates. Although Close Brothers is smaller compared to Black Horse, numerous consumer complaints implicate it.
• Santander: With potential claims of around £166 million, Santander was a significant lender using DCAs. Many of their customers could now be eligible to reclaim substantial amounts due to overcharged interest​.
• Barclays: Barclays Partner Finance was also a participant in DCA schemes, which means customers who financed their cars through Barclays could have paid inflated rates​.

Mis sold car loan: average payouts

A successful PCP claim payout varies based on the agreement details and the amount of overcharging. Payouts generally range from £1,000 to £10,000. Some larger claims can exceed this amount. Customers charged especially high interest rates may receive more, particularly if they financed through a major lender.

How to Make a car finance claim

If you suspect mis-selling of a car finance deal, complete our free check to see if you can claim.

• Evaluate your agreement: Complete our car finance checker to check your edibility. We begin by reviewing your car finance agreement thoroughly. Looking for terms that were not clearly explained or disclosed at the time of signing. This step is crucial in identifying any misleading information or hidden fees that could constitute as car finance mis sold.
• Gather your documentation: We collect all related documents, such as the finance agreement, communications with the finance company, and payment records. Organised documentation strengthens your case by providing a clear trail of evidence when submitting a car finance claim.
• Negotiate: One of our Legal Panel firms will process and negotiate your claim. Consulting with a legal expert who specialises in financial mis-selling can offer significant advantages. They provide a professional assessment of your case and guide you through the legal intricacies of filing a claim.
• File your claim: Once you have everything in order, or legal panel firm will submit your claim to the finance company or through a financial ombudsman service.
• Compensation: If successful, you could receive compensation for the overpaid amounts and potentially additional damages.

Conclusion: Act now and recoup your losses

The window for making a claim is still open, but it’s crucial to act quickly. As regulatory deadlines approach, the sooner you file your complaint, the better your chances of recovering the money owed to you. Whether you financed your vehicle through MotoNovo, Black Horse, Close Brothers, Santander, or Barclays, thousands of drivers are eligible to claim. Secure the compensation you deserve for your car finance mis sold issue with our free car finance checker. Don’t wait – start your claim today!