Consumer advocacy groups are urging UK drivers to check if they were mis-sold car finance agreements. The average payout for affected consumers now stands at £4,500, according to recent claims data. With new regulatory scrutiny, lenders are facing growing pressure to compensate customers who were overcharged.
Why Are So Many Car Finance Deals Mis-Sold?
For years, UK car dealerships and lenders used discretionary commission models that incentivised higher interest rates. Financial Conduct Authority (FCA) investigations revealed that many agreements contained hidden fees or inflated interest rates. Consumers trusted dealerships to offer fair financing, but in many cases, they were unaware of these extra costs.
Between 2014 and 2021, millions of UK drivers financed cars using Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements. If lenders failed to disclose commission structures or misrepresented costs, these agreements could qualify as mis-sold. Consumers now have legal grounds to reclaim unfair charges.
Who Is Eligible to Claim for Mis-Sold Car Finance?
If you took out PCP or HP finance between 2014 and 2021, you might be owed compensation. You could have a claim if:
- The lender did not clearly explain commission fees or how they impacted interest rates.
- The dealership or broker failed to disclose alternative, cheaper financing options.
- You were pressured into taking finance without being given time to compare rates.
Even if you completed payments or refinance your car, you could still reclaim the overpaid interest and charges. Financial watchdogs have already secured millions in refunds for UK consumers.
How to Start a Mis-Sold Car Finance Claim
Starting a claim is free and straightforward, with no need to hire a solicitor. You can contact your lender directly or use a consumer advocacy group to assist with the process.
To file a claim, you’ll need:
- Your original finance agreement (PCP, HP, or lease contract).
- Loan statements showing interest payments and total charges.
- Emails or letters from the lender or dealership about the agreement.
Lenders have up to eight weeks to respond, and if they reject your claim unfairly, you can escalate the case to the Financial Ombudsman Service (FOS).
How Much Compensation Can You Expect?
The average payout for a successful mis-sold car finance claim is £4,500, based on recent figures from consumer rights organisations. Some claimants have received over £10,000, depending on the size of their loan and the level of overcharging.
Compensation typically includes:
- Refund of overpaid interest and fees.
- Interest on the refunded amount, calculated from the date of the agreement.
- Additional compensation for financial distress in some cases.
Case Study: Close Brothers Finance Claim Success
A recent case involved Close Brothers Finance, where a customer reclaimed thousands after discovering hidden commission charges. The finance agreement did not disclose key details, and the consumer advocacy group successfully argued for a refund. This highlights why thousands of UK drivers are checking their old car finance contracts.
Final Thoughts
With growing scrutiny on lenders, now is the best time to check if you were mis-sold. Many drivers are unaware they overpaid thousands in interest, and the claims process is easier than ever. If you suspect unfair charges, gather your documents and start your claim today.
If you’re unsure whether your agreement was mis-sold, seeking advice from a consumer rights organisation can help. With an average payout of £4,500, checking your car finance deal could be well worth your time.