App Fraud

How to Claim Compensation for Mis Sold Car Finance

We are committed to helping you reclaim the money that rightfully belongs to you. Our extensive services include everything from aiding you in reclaiming tax allowances, fighting misconduct in financial products, to making flight delay and housing disrepair claims. Rest easy knowing that we’re an FCA regulated body with a wealth of information ready for your oversight, and user-friendly tools to expedite your rightful claims.

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Understanding Car Finance Options

Personal Contract Purchase (PCP) vs. Hire Purchase (HP)

When you’re faced with car finance options, PCP and HP are two prevalent types you’ll encounter. PCP tends to have lower monthly payments since you’re covering the expected depreciation of the car rather than the full cost. At the end of your PCP term, you’re presented with three options: return the vehicle, make the “balloon payment” to own it, or roll over into a new plan. On the other hand, an HP agreement is straightforward—you pay monthly instalments that cover the vehicle’s purchase price plus interest, and once these are completed, the car is yours.

To put it into perspective, if you finance a car worth £15,000 with PCP, and it’s estimated to depreciate to £8,000 after two years, you’ll only pay the £7,000 difference over the term. With HP, you finance the entire £15,000, resulting in higher monthly payments.

The Role of Commissions in Car Finance

Commissions in car finance are a significant driver for salespeople and can influence the type of deal you’re offered. The commission system can sometimes lead to mis-selling, as the salesperson’s goal may be more aligned with profit than with your best financial interests. If you’ve not been informed about the commission structure influencing your finance deal’s terms, Money Back Helper views this as a potential case of mis-sold car finance.

The UK Car Finance Market Overview

Prevalence of Car Finance Deals

In the UK, car finance deals are a common aspect of vehicle ownership. A significant number of consumers opt for finance options to spread out the payments of their new vehicle, making these products a staple in car purchases. Between 2014 and 2019, it’s estimated thousands may have entered into such agreements not fully understanding the financial implications, which could potentially qualify for compensation with the help of Money Back Helper.

Regulatory Oversight by Financial Conduct Authority (FCA)

The FCA plays a pivotal role in the oversight of the UK’s car finance market, ensuring fairness and transparency. They mandate strict rules for how finance products should be sold, putting the onus on dealerships and lenders to provide clear, comprehensive information. If these standards are not met, customers like you have a recourse to claim, and Money Back Helper stands ready to guide you through the process of recovering what is rightfully yours.

Identifying Mis-Sold Car Finance

Identifying Mis-Sold Car Finance

When it comes to navigating the complex world of car finance, it’s crucial you’re fully informed. Mis-selling occurs when finance providers or salespersons take advantage of your trust, leading to agreements that don’t meet your needs or distort the true cost of borrowing.

Hidden Commissions and Interest Rates

Often, salespersons won’t disclose the commission they earn from your deal. Hidden commissions subtly inflate the cost of your car, ensuring a heftier profit for the dealership. This mis-selling paves the way for higher interest rates that are not justified, part of a practice to increase the lender’s and the dealer’s cut from the transaction.

After a sweeping FCA investigation, it emerged that 95% of car finance agreements carried undisclosed commissions, potentially costing you over £1,000 in excess payments. Since January 28th, 2021, the FCA has banned this type of commission, signalling a leap forward for consumer protection.

Inadequate Explanation of Terms and Conditions

You’ve the right to understand every aspect of your car finance deal. A common mis-selling tactic is the failure to explain terms and conditions clearly. This includes the full financial implications of exceeding mileage limits, additional charges for wear and tear, and, crucially, whether you’ll own the car at the end of the term.

Common Pitfalls in Car Finance Agreements

Car finance agreements often have pitfalls that can entrap the unwary. Being aware of these can save you from financial distress and help claim what’s rightfully yours in case of mis-selling.

Unfairly High Interest Rates

Dealerships may offer finance agreements with inflated interest rates. This goes hand in hand with undisclosed commissions where the advice given is less about your financial well-being and more about the dealer’s profit margin.

Unreasonable Fines and Fees

Exorbitant fines for minor damages or fees for crossing mileage thresholds are not just inconvenient; they’re often signs of a mis-sold finance agreement. These hidden costs can drastically affect the affordability of your car, something Money Back Helper can scrutinise in your claim.

Issues with Credit Checks and Vehicle Valuation

Proper credit checks serve your interest, ensuring you’re not overburdened financially. In situations where checks are superficial or skipped, you’re potentially mis-sold an agreement beyond your means. Similarly, an overvalued vehicle affects the total finance cost, leaving you with debt that exceeds the car’s worth. Money Back Helper has experience in identifying such discrepancies, supporting your compensation claim.

Remember, car finance shouldn’t be a maze. If you suspect you’ve been mis-sold a financial product, Money Back Helper stands ready to assist in untangling the complex threads and reclaiming your money.

Your Rights and Potential Claims

Understanding your rights in the realm of car finance and potential claims is crucial if you suspect you’ve been mis-sold a financial product. Whether you’re grappling with a Personal Contract Purchase (PCP), Hire Purchase (HP), or any other type of car finance, specific criteria and time limits apply to making a claim. Furthermore, the types of compensation available are varied, with some cases resulting in significant payouts.

Eligibility for a Car Finance Claim

Criteria for Mis-Sold Finance Claims

When it comes to car finance, the eligibility criteria for filing a mis-selling claim are clear and concise:

  • Full Disclosure: Salespersons must fully disclose any commissions earned from the sale.
  • Adequate Explanation: They ought to provide a thorough explanation of the financial contract, including all terms and conditions.
  • Transparency in Finance Options: All available finance options should be presented clearly, alongside a comprehensive explanation of each.
  • Interest Rate Clarity: The interest rates charged for loan options must be transparent, and the best rate should be offered to you.
  • Affordability Checks: It’s vital that affordability checks are conducted to ensure financial suitability.

If the above were not adhered to, you may be able to raise a claim.

Time Limits for Making a Claim

Time is of the essence when reclaiming your money for mis-sold car finance. Typically, you have up to six years from the date of the agreement to make a claim, or three years from when you first became aware of the mis-selling. This time frame ensures that you have ample time to notice discrepancies and act upon them.

Types of Compensation in Mis-Sold Car Finance

Calculating Your Compensation

Compensation is calculated based on the financial detriment suffered. This means reimbursement for overpaid interest, removal of unwarranted charges, and any potential refunds on the finance agreement. The goal of compensation is to place you back in the position you would have been in had the mis-selling not occurred.

Case Studies and Precedents

To illustrate, let’s consider a recent case study. John Smith was unaware that the salesperson had included a high, undisclosed commission in his PCP agreement. After seeking assistance from Money Back Helper, John successfully claimed back £5,000, which covered the undisclosed commissions and overcharged interest.

These real-life examples shed light on the meaningful impact a well-founded claim can have, potentially rectifying financial losses and holding financial institutions accountable. With the right support and guidance, claiming compensation for mis-sold car finance can be a straightforward process, paving the way to financial recovery without the burden of unwarranted costs.

The Claims Process

How to Initiate a Car Finance Claim

Required Documentation and Evidence

To kickstart your claim, it’s crucial that you gather all necessary documentation that relates to your car finance agreement. You’ll need:

  • Your finance agreement contract.
  • Any communication between you and the dealer/broker.
  • Financial statements indicating payment history.
  • Evidence of undisclosed commissions, if any.

In a case like Mrs. B’s, her meticulous record of all communications with the car dealer and finance provider was instrumental in challenging the undisclosed commissions and inflated interest rates.

Steps to File a Claim

First, contact Money Back Helper to assess the viability of your claim. Once established:

  1. Submit your finance agreement and any ancillary documents to our team.
  2. We’ll analyze the details, checking for undisclosed commissions and unfair interest rates.
  3. Money Back Helper will then formulate a robust claim on your behalf.

What to Expect During the Claim

You’ll be updated at each stage of the claims process. Expect a thorough review of your paperwork followed by direct liaison with your lender. If your claim involves unclear contract terms or inappropriate selling of finance options, rest assured, our team is well-versed in these matters, taking the lead from recent significant case wins in this emerging area of consumer law.

Handling Disputes and Appeals

Should the lender dispute your claim, Money Back Helper is prepared to challenge their stance, armed with all necessary evidence. We will pursue the claim through the Financial Ombudsman Service if necessary, ensuring all relevant information is presented to substantiate your case.

In every step, Money Back Helper remains your staunch ally in the fight to rectify the wrongs of car finance mis-selling, steadfast in our mission to reclaim what is rightfully yours. Your financial well-being is our priority, and we advocate relentlessly to see justice served.

How We Can Help

You’ve now got the knowledge to tackle mis-sold car finance head-on. Remember, it’s about being thorough with your documentation and proactive in your approach. Trust in Money Back Helper to guide you through each step, ensuring your claim is robust and ready for action. They’re on your side, fighting to reclaim what’s rightfully yours. Don’t let mis-selling slide; it’s time to take control and seek the justice you deserve.

Frequently Asked Questions

Can I return a financed car within 6 months?

Yes, you can return a financed car within six months if you first attempt to resolve the issue with the dealer and then provide written reasons for rejecting the vehicle.

Can I give my financed car back if it’s faulty?

Yes, to give back a financed car due to faults, you need to provide evidence of the faults, a misdescription, or hidden history to the finance company, along with your written vehicle rejection.

What are the rights to refund a car?

Under the Consumer Rights Act 2015, you have the right to a full refund within the first 30 days after buying a faulty car. Additionally, this Act covers faulty servicing or repair work.

Is mis-sold car finance legit?

Mis-sold car finance can be legitimate. However, be cautious as some firms may not be authorised, leaving you without recourse to the Financial Ombudsman Service or protection from the FSCS.

How long do mis-sold car finance claims take?

The duration of mis-sold car finance claims can vary, potentially taking a few months up to 18 months, depending on whether the mis-selling responsibility is accepted or disputed by the dealership or broker.

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