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How do I know if I was mis-sold car finance?

One of the most challenging aspects of any finance mis-selling is that, generally, it’s almost impossible to know if you were mis-sold until an investigation takes place.

But you shouldn’t let that put you off finding out!

As we work on a no-win, no-fee basis, you can take advantage of our free online car finance check and only instruct us to bring a claim if we believe you may be owed compensation – you could get an answer and start your claim in just minutes!

How can car finance mis-selling happen?

There are many ways car finance mis-selling can happen.

However, the focus of the current Financial Conduct Authority (FCA) investigation into car finance mis-selling is hidden commissions that resulted in consumers paying a higher interest rate and, therefore, making higher payments than they would or should have done.

How were commissions hidden in car finance agreements?

Hidden commissions usually came about due to discretionary commission arrangements (DCAs), which the FCA banned on 28th January 2021.

DCAs allowed whoever organised your car finance agreement – often the car dealer but sometimes another broker or third-party intermediary – to choose the interest rate you would pay. Now, that might sound alarming enough on its own. But what if we told you that the car dealer or whoever was organising your finance agreement would earn more commission if you paid a higher interest rate?

That’s precisely what happened and will be the basis of any claim we bring on your behalf.

How likely is it that I was a victim of car finance mis-selling?

According to the FCA, before the 2021 DCA ban:

  • 95% of car finance deals were sold with a commission model.
  • 40% of all car finance deals contained some element of interest inflation.

So, if you had a car on personal contract purchase (PCP) before 28th January 2021, it’s not far from a 50/50 chance your car finance deal included hidden commission and was therefore mis-sold.

But that’s not all.

Despite the FCA banning DCAs in 2021, some concerns remain that similar practices continue today.

Check your car finance claim with LawPlus Solicitors, and we’ll tell you if we think you may have been mis-sold!

How much car finance mis-selling compensation will I get?

If your car finance agreement was mis-sold, your compensation award will depend on several factors, including:

  • The level of financing needed to fund your purchase, which in turn will depend on the price of the car.
  • The extent to which your car dealer or finance broker artificially increased your interest rate, which would have impacted your repayments.

Generally, your compensation award will be the amount of money you overpaid due to the inflation of interest. So, for example, if your artificially increased interest rate meant you ended up paying £30 a month more than you should have over three years, your estimated compensation award would be £1,080.

Remember, that’s just an example! At LawPlus Solicitors, we’re achieving an average compensation award of £1,500 per finance agreement for our clients.

Does “per agreement” mean I can make multiple claims?


If, like many UK motorists, you have used PCP financing to fund various new and used car purchases through the years, you could potentially bring a claim for all of them.

However, for us to successfully bring a claim, you will likely need to have retained all your paperwork from previous agreements older than six years.

How far back can I make a claim for?

As of May 2024, the FCA’s investigation into the scale of car finance mis-selling in the UK is ongoing.

Depending on the outcome of its investigation and the scale to which it believes car finance mis-selling has occurred, the regulator may choose to place a retrospective time limit on how far back you can make a claim. However, the FCA may say that you can bring a claim for car finance agreements dating back to 6th April 2007, when the Financial Ombudsman Service (FOS) took over jurisdiction of motor finance complaints.

Another option open to the FCA is to say you can bring claims covering a certain period but with a deadline by which you must have made your complaint.

Remember that it may not be as easy to bring claims dating further back than six years ago, as you’ll likely need to have retained all your documents relating to the agreement in question so that a proper review and investigation can happen.

If you’ve had multiple car finance agreements dating back to April 2007 and no longer have the paperwork, try to remember if you had a log-in to an online portal or a similar feature where your documents may be accessible. If you don’t have any access to your documents at all, bringing a claim will likely prove difficult.

Start your car finance mis-selling claim now!

Using our free online car finance check, you can discover if any car finance agreements you had in the past six years may have been mis-sold in minutes.

Check your car finance claim now, and let’s take the first steps to getting your money back.

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