What is mis sold Car Finance?

Mis-selling happens when finance providers sell products like PCPs without properly disclosing crucial details. This often causes customers to pay more than necessary. PCP agreements allow drivers to pay lower monthly payments compared to traditional loans, with a large optional final payment to buy the car outright. To check if you have been affected by mis-selling, use our mis-sold car finance checker today. Many finance providers did not inform customers of key facts resulting in potential PCP 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 mis-sold car finance landscape stems from Discretionary Commission Arrangement’ (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 PCP 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 PCP claims. It is estimated that Black Horse faces claims amounting to £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 have implicated 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​.

Car Finance Claim: 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 PCP Claim

If you suspect mis-selling of a PCP or HP 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 or PCP 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 mis-selling.
• Gather your documentation: We collect all related documents, such as the finance agreement, any 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 for Your PCP Claim

The window for making a PCP 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 money owed to you. Whether you financed your vehicle through MotoNovo, Black Horse, Close Brothers, Santander, or Barclays, thousands of drivers can claim back mis-sold finance. Don’t wait – start your claim today and secure the compensation you deserve for your mis-sold car finance with our free car finance checker.