Easy Claim
UK’s Number 1 reclaim specialists.
We do all the hard work for you
Easy Claim
UK’s Number 1 reclaim specialists.
We do all the hard work for you
Easy Claim
UK’s Number 1 reclaim specialists.
We do all the hard work for you
Have You Been Mis Sold Car Finance PCP?
Purchasing a new car hurts the pocket, luckily, there are different car finance deals available, so paying it in one big payment is unnecessary. While this finance option seems like a good solution, it is essential to look more into the offer’s details. When the monthly payments are low, these finance options are sometimes mis-sold to customers; as a result, customers pay more than 50% more than they should for their car financing.
Most car finance deals are based on hire-purchase and Personal Contract Purchase (or PCPs). A PCP claim is like personal loans in that you pay back an agreed amount over a set period (usually 2-4 years for cars). Calculate the loan amount based on the depreciation value of the vehicle. If the customer chooses to make a single payment for the car after the loan period ends, they would be able to own it outright. The customer can pay a sum that is equal to the estimated value of the car.
Despite popular misconceptions, PCP car finance does not entail paying off the vehicle’s value as part of your loan. Rather than paying off your car loan, the payments pay off the difference in its value from when you purchase it until when your contract expires. If over the course of the contract, the car’s value decreases by £4,000, you will pay that amount in total via monthly payments as well. Even after paying monthly, you are still not considered as the car owner.
You can either offer the vehicle back at the end of the contract hire or pay a lump sum if you wish to keep (and therefore own) the car. In this case, the payment is referred to as a balloon payment. The PCP car finance deal is a very popular form of credit because it allows people to afford new cars. As an example, consumer car loans amounted to £28 billion in 2012. Just four years later, that figure rose to £58 billion. Interestingly, the motor finance market is only second to the mortgage market in lending.
Claim against your pcpClaiming against Mis sold PCP car Finance
In some cases, almost every finance company and dealership is overcharging by more than £1,000. The interest charges on PCPs are often higher than expected, particularly if you didn’t understand the PCP process fully before you signed. The Sun newspaper reported that millions of consumers could be owed compensation for unaffordable and expensive car financing deals
Mis sold PCP finance examples:
Here are some scenarios in which you may have been mis-sold a car loan:
Your car dealer failed to explain the terms regarding your finance deal. Understanding fully that you don’t own the car after the PCP contract is essential.
There were no other options.
The dealers deceived you, making you believe like it’s the best deal out there. When in fact, with a PCP agreement, there’s a higher interest rate.
The dealer offered other additional products such as insurance, which you will not need. However, the dealer still insisted so they could gain more profit.
Insufficient detail was provided regarding the interest charges by the salesperson.
In some cases, the car dealership does not show who owns the actual vehicle, and it might be a third-party hire purchase business.
You may be eligible to sue if you have experienced some of the above with your Personal Contract Plan (PCP). Get in touch with the experienced team who will guide you through the claims process. Our team is here to assist you.
PCP Mis-selling Claim Example
Person A entered into a PCP agreement to buy a Car in 2015. The car’s cash price was £11,950, but the total amount payable under the PCP finance agreement was more than £16,000.
Unknown to Person A, the dealer who sold him the car received a commission payment of almost £1,800 from the finance company.
The method of calculating the commission in Person A’s case was directly linked to the interest rate he paid, meaning the dealer had an incentive to increase the interest rate to receive a higher commission payment himself.
The lender set a range of interest rates between 5% to 10%, within which the dealer could effectively charge Person A what they liked. Although they were willing to charge Person A as little as 5%, they charged him almost 7%.
Person A instructed us to pursue a claim to recover the undisclosed commission and the additional interest he paid above what he would have paid at the minimum interest rate permitted.
We have issued Court proceedings to seek to recover the above sums totalling around £4,000.
PCP Claims Frequently asked questions
How Far Back Can I Claim?
We can help with mis-sold finance agreements in the last 10 years.
Does The Car Loan Have To Be Paid Off Or Can I Still Claim If The Loan Is Still Ongoing And Active?
It doesn’t matter if the loan is paid off or is still ongoing. We can still look at your agreement as long as it was in the last 10 years.
Can I Claim If I Bought A Car And Used A Personal Loan Instead Of A Car Loan?
Unfortunately, we would not be able to claim on your behalf in this instance.
How Much Do We Charge For Claiming The Compensation For You?
Our fees will never be more than 30% +VAT of the total compensation you are awarded. Please see our terms and conditions for more information.
What is a secret/hidden commission?
This is where the car dealer sells you a finance package for the car but does not tell you that they are getting a commission or just how large the commission they are getting is. Most customers expect the salesperson or dealership to make their money on the sale of the car, but they do not realise that they may also be getting a commission from the finance company for the PCP finance agreement that goes with it meaning that the customer is potentially paying more than they should.
Because of the high risk of there being a conflict of interest between the customer and the car dealer (the dealer recommending finance products based on the amount of commission as opposed to what is best for their customer), and to ensure full transparency for their protection, the exact amount of this commission should be disclosed to the customer.
If the payment of commission and the amount of that commission has not been explained, then the customer can claim compensation for mis-sold PCP car finance.
How much compensation can I claim for mis-sold car finance?
This depends on many factors including the wording of the finance agreement, the interest rates that were charged, the amount of finance and how long ago the PCP finance agreement was signed. However, you could be entitled to thousands of pounds in compensation.
If you think that you have been mis-sold car finance, get in touch with our mis-selling team and we can discuss your claim and what it might be worth.
How long will my mis-sold car finance claim take?
This varies from claim to claim. If the dealership and/or the finance company accepts responsibility for the alleged PCP mis-selling and agrees to put things right, then a compensation claim can take just a few months. If the allegations are disputed, then the claim could go to the Financial Ombudsman Service (FOS), where the case could take anywhere between 12 to 18 months to conclude.
If starting court proceedings is the best option, then that process again could take somewhere between 12 and 18 months.