Many car buyers, both new and used, finance their purchases—nine out of ten new car buyers do so. If you find yourself with a finance package that was beyond your means or if the car had unresolved issues, you might be eligible for compensation.
Financing a car allows you to enjoy a new or used vehicle without the immediate financial burden of the full price. Various finance options might enable you to own the car at the end of the payment period, or simply return it after using it for a predetermined time.
The car finance industry is massive, with the Finance & Leasing Association reporting that its members secured new consumer car finance agreements totaling £37 billion in the UK in 2021, spanning over two million agreements.
Understanding Different Types of Car Finance:
- Personal Contract Purchase (PCP): The most prevalent form of car finance, PCP acts like a loan to assist with your purchase but doesn’t require paying off the car’s full value unless you opt for a large final balloon payment. For more details, see our PCP guide.
- Hire Purchase: This method involves monthly payments that cover the car’s value. The car is yours only after the final payment is made. Learn more about Hire Purchase.
- Leasing (Personal Contract Hire): This is essentially renting a car for a fixed period without the option to buy.
While many are satisfied with their car finance arrangements, others may have been misled during the sale, either through unclear contract details or insufficient affordability checks. If you believe your contract was mis-sold, you have grounds to complain.
Also, you might encounter issues with the car itself. Though not related to mis-selling, you can still file a complaint about this.
Key Points:
- Transparency Issues: If costs and contractual obligations were not clearly communicated, you can lodge a complaint.
- Affordability Issues: Before approving you, lenders must ensure that you can afford the finance plan. If this wasn’t properly assessed, and you struggle with repayments without major changes in your circumstances, you might have been mis-sold the finance.
- Vehicle Issues: If your car doesn’t meet the standards promised, your consumer rights could entitle you to a refund or repair.
Remember, it’s possible to seek redress regardless of whether your finance agreement is active or concluded. The Financial Ombudsman Service (FOS) may consider claims even if they’re brought up years after the agreement ended, especially if the mis-selling was only recently discovered.
Complaining is straightforward and free, so if you suspect any issues with your car finance, it’s worthwhile to pursue a claim. You may be entitled to compensation for mis-sold services or policies, overcharged fees, or faulty vehicle complaints.
