Car finance mis-selling has left many UK consumers paying unfair agreements. If you were misled about your finance terms, you might be owed compensation. This guide explains how to check eligibility and claim refunds.
What is Mis-Sold Car Finance?
Mis-selling happens when lenders or dealerships fail to disclose essential finance terms. This includes hidden commissions, inflated interest rates, and unsuitable agreements. If you were not informed properly, you may have grounds for a claim.
How to Check if You Were Mis-Sold Car Finance
- Undisclosed Commission – Dealers took hidden commissions, leading to inflated costs.
- Incorrect Affordability Checks – Lenders approved finance without assessing your ability to repay.
- Unclear Terms – You weren’t told about fees, interest rates, or commission structures.
If any of these apply, you could be eligible for compensation. Reviewing your agreement and statements is the first step.
What Are Your Rights Under UK Law?
The Consumer Credit Act 1974 protects buyers from unfair finance agreements. The Financial Conduct Authority (FCA) regulates car finance lenders. If your deal was mis-sold, you can request a car finance refund to recover any unfair charges.
How Much Can You Claim?
Compensation varies depending on the financial impact. A 2021 FCA review found that hidden commissions cost consumers an average of £1,100 to £2,500. Claims can include refunded interest, charges, and additional compensation. The car finance scandal in the UK has led to increased scrutiny of lenders, making it easier for consumers to file claims.
How to Make a Mis-Sold Car Finance Claim
- Gather Your Documents – Find your car finance agreement, statements, and payment records.
- Write to the Lender – Explain how the finance was mis-sold and request compensation.
- Escalate to the Financial Ombudsman – If the lender rejects your claim, you can complain to the Financial Ombudsman Service (FOS).
How Long Does a Claim Take?
Lenders must respond within eight weeks to a formal complaint. If unresolved, the FOS process takes up to six months. Using a solicitor or claims management company may speed up the process but involves fees.
Do You Need a Claims Management Company?
You can claim directly for free by contacting your lender. Claims firms charge fees, often 25% to 40% of compensation. Unless you need assistance, handling the process yourself saves money.
Final Thoughts
If you suspect mis-selling, act fast to reclaim your money. Check your agreement, submit a complaint, and escalate if necessary. Consumers have successfully reclaimed thousands in mis-sold car finance refunds.
Sources:
- Financial Conduct Authority (FCA) Report on Car Finance Mis-Selling, 2021
- Financial Ombudsman Service (FOS) Complaint Guidelines, 2023
- Consumer Credit Act 1974
