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How to bring a claim for mis-sold car finance

The easiest way to bring a claim for mis-sold car finance is to use our free online check to discover if you may be owed money.

In addition to being free, our online car finance check does not lock you into any obligation to proceed. However, if you wish to instruct us to bring a claim on your behalf and we believe that compensation is due, we will pursue your case on a no-win, no-fee basis.

What is a car finance mis-selling claim?

Up to 90% of new car sales in the United Kingdom involve a finance agreement, most commonly personal contract purchase (PCP).

However, before 28th January 2021, car finance brokers and other intermediaries – often the dealer selling you the car – could choose the interest rate you paid on your agreement. This was possible due to Discretionary Commission Arrangements (DCAs), which meant that the higher your interest rate, the greater the commission the person or company acting as the broker or intermediary would earn.

Car finance mis-selling may have occurred if you weren’t made aware of this. The Financial Conduct Authority (FCA), which as of June 2024 is currently investigating the scale of potential mis-selling, takes the position that had you known your interest rate was inflated, you would have either:

  • Negotiated
  • Walked away from the deal
  • Found an alternative finance solution

But if you didn’t know what was happening, you’d have taken the deal and subsequently paid a higher interest rate – and a higher monthly payment – than you could and should have done.

A car finance mis-selling claim aims to get back at least all the money you overpaid during your agreement.

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

Financial mis-selling tends to happen and go undetected because it’s generally tricky to know if you’ve been mis-sold.

While you might have thought it was odd that you were paying a high interest rate despite bank rates being low and having an excellent credit rating, that doesn’t necessarily mean you were mis-sold.

The only way to know for sure is to use our free car finance check.

How do car finance claims work?

The first thing to do is to use our free car finance check to see if compensation is due.

If we believe you are owed car finance mis-selling compensation, you can then:

  • Write to the relevant lender yourself and make a complaint.
  • Instruct us to pursue your claim on a no-win, no-fee basis.

As of June 2024, the FCA has effectively paused car finance mis-selling claims while it investigates and understands the scale of the problem, by pausing the usual eight-week timeframe in which lenders must respond to complaints.

The regulator is due to report by the end of September 2024, at which point the eight-week timeframe will apply again. Although many lenders are not responding to new car finance mis-selling complaints during this time, some are still responding and even paying out compensation.

The FCA has already told lenders to ensure they can cover compensation costs arising from mis-selling complaints and also said that it may launch a formal redress scheme.

Rather than waiting until the FCA reports the findings of its investigations in September, it is still worth completing our free car finance check and starting the claim process if we think you may be owed compensation.

This ensures that your claim is already up and running before the regulator makes any decisions, which may include guidance or steps that inhibit your ability to reclaim all your money.

Have any firms been found guilty of car finance mis-selling?

In early 2024, the Financial Ombudsman Service (FOS) upheld two complaints against Barclays Partner Finance and Black Horse concerning car finance mis-selling, the latter being part of Lloyds Banking Group.

At the time of writing, a Barclays legal challenge against the FOS ruling was pending, although the bank did pay the customer compensation.

Meanwhile, Lloyds announced in February that it had set aside £450 million for potential compensation due to car finance mis-selling victims.

Note this doesn’t mean that your car finance agreement was definitely mis-sold if Barclays or Lloyds was your lender. The best way to discover if you were mis-sold is to use our free online car finance check.

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

If we believe you are owed car finance mis-selling compensation, your payout will depend on several things, including:

  • The level of finance needed. For example, if you paid a higher deposit to reduce your monthly payments, you will likely be owed less than someone who got the same car for the same price but paid a lower deposit and higher monthly payments.
  • How much more you paid due to interest rate inflation.

Your compensation payout will typically be at least the amount you overpaid in interest.

For example:

  • If you paid £30 a month more than you would have done without interest inflation.
  • For 36 months.
  • Your compensation award would be at least £30 x 36: £1,080.

LawPlus Solicitors clients are, on average, receiving £1,500 in compensation per mis-sold car finance agreement.

Start your car finance mis-selling claim now!

Use our free online car finance check to see if you may be owed compensation, and start your claim today.


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