Bought your vehicle using a finance arrangement before January 28, 2021?
You could be entitled to thousands of pounds of compensation if you’ve been mis-sold car finance for your car, van, caravan, or motorbike.
Whether you’ve felt hoodwinked through the use of complex terms, hidden fees, or undisclosed charges, you can rest assured that the Justizia team has your best interests at heart.
A recent investigation by the Financial Conduct Authority (FCA) found that lots of people in the UK have been hit with hidden charges on car loans, especially Personal Contract Purchase (PCP) and Hire Purchase (HP) deals. They allowed brokers to increase the interest rates they offered customers for their car finance deals. While this practice was banned in 2021, these practices were known as discretionary commission arrangements (DCAs).
DCAs acted as an incentive for brokers because customers that paid a higher interest rate, meant a bigger commission for the broker. Approximately eight out of 10 cars bought through these deals overcharged customers so dealers could pocket more commission.
Following the FCA’s investigation and more public awareness, there’s been an influx in customer complaints about unfair car finance overcharging, resulting in a surge in HP and PCP claims.
If you believe your car finance was mis-sold, allow Justizia Law to help you determine whether you’re owed compensation and, if so, reclaim your hard-earned money on your behalf.
If you've financed a car through PCP or a car loan, you might've paid more than you should've. You might have a claim worth thousands of pounds if:
A popular and flexible way to finance a vehicle, a PCP arrangement allows you to borrow the money to cover the cost of a vehicle and then pay it back in monthly instalments over a set number of years. You’ll usually pay a deposit upfront to secure the vehicle. Once the contract is over, or coming to an end, you’ll be able to choose between making a final payment to own the vehicle, upgrading to a new model, or returning the vehicle at no extra cost.
A type of credit agreement between a buyer and seller, HP agreements can be used to finance a car as the borrowed money is secured against the vehicle. After putting down a deposit, you’ll make monthly payments over a defined period until you have paid the required amount in full. When you enter into a HP agreement, you will only own the vehicle after all the required loan payments have been made.
Unsure whether you’ve been mis-sold car finance?
If you’ve bought a motor vehicle, be it a car, van, campervan or motorbike, on finance (using either a PCP or HP agreement) typically after April 2007 but before January 28, 2021, there’s a strong possibility that you’ll have been mis-sold.
Regardless of whether your agreement is still active, or it’s ended within the past six years, it’s important to check as soon as possible. This can help to prevent time limitations from impacting your chances of getting compensation, but what’s the best way to check?
To find out more about your car finance arrangement, you should start by looking for any relevant paperwork. If your agreement is still active, you should have either a paper or digital copy of your car finance agreement. If not, it’s worth contacting your provider.
Alternatively, your credit report will also list any financial agreements you’ve taken out within the past six years.
Older agreements, such as those more than six years old, can be more difficult to obtain if you don’t have your own copy. This is because lenders are only legally obligated to retain the details of your financial agreement for six years. However, it’s still recommended that you contact them first as they may still have access to your financial agreement.
There are several ways that you can make HP and PCP claims in the UK.
You can either contact the lender directly to discuss your claim, reach out to the Financial Ombudsman Service (FOS), or get in touch with a no-win, no-fee solicitor or legal professional, like Justizia Law.
The average payout for PCP car finance claims is estimated to be around £1,600, but some cases can result in compensation of up to £10,000. For a more accurate idea of how much compensation you could be owed, it’s important to take into account the size of the loan as well as the difference between the interest rate you were quoted and the rate you should have received for your car finance agreement.
Following an investigation by the FCA, a number of finance companies have stated that they will be setting aside money to help cover any costs associated with the potential investigation.
This includes Lloyds Banking Group which has set aside a considerable £450m to cover the potential costs of the review. This is because Lloyds Banking Group has a specialist vehicle finance division, Black Horse, which is also the UK's largest motor finance provider.
Other firms that have also been involved in the review or identified by analysts include big names like Barclays, Close Brothers, and Santander Consumer Finance.
However, hundreds of car finance firms are believed to have used DCAs, including Mercedes Benz Financial Services and BMW Financial Services.
If you’re concerned about your car finance provider, it’s worth checking to see if you’re eligible for compensation.
