Financed a car before 2021? You may have overpaid without realising
Car finance agreements often contain hidden charges that increase the total amount you pay over time. If you took out PCP (Personal Contract Purchase) or HP (Hire Purchase) finance between 2007 and 2021, you might have been affected by undisclosed commissions. The Financial Conduct Authority (FCA) has confirmed that many lenders mis-sold these agreements, potentially leading to thousands in overpayments.
What are hidden charges in PCP agreements?
Hidden charges in PCP agreements often come from high-interest rates, excessive fees, and undisclosed commissions. Many lenders included a discretionary commission model, where brokers were incentivised to set higher interest rates for bigger commissions. The FCA banned this practice in 2021, but millions of drivers had already been charged unfairly.
How to check for hidden commissions in your PCP deal
Many car buyers never see the commission details in their agreements. Lenders and brokers often hid this information within complex terms and conditions. Check your agreement for mentions of ‘discretionary commission’ or ‘broker fees,’ as these suggest you may have been overcharged. If you financed a car before 2021, you can use the PCP Claims calculator to see if you are owed compensation.
Signs you might have overpaid on your PCP finance
- Your interest rate was significantly higher than advertised by the lender.
- The broker or dealership did not explain how they set your interest rate.
- Your finance agreement has vague or unclear wording around commissions.
- You felt pressured into accepting a deal without understanding the full costs.
Key fees to watch out for in your PCP agreement
1. Balloon payment increases
The final payment in a PCP deal, known as a balloon payment, is often much higher than expected. Lenders may have inflated this cost to lower your monthly payments artificially. If you cannot afford this, you might have no choice but to refinance at a higher rate.
2. Excess mileage charges
Most PCP contracts include strict mileage limits. If you exceed these, lenders charge high penalties, sometimes up to 20p per extra mile. This can add up quickly if you drive more than estimated.
3. Early repayment penalties
Some agreements charge fees if you settle your finances early. Check your terms to see if a lender included this clause unfairly, as some consumers were misled into believing early repayment was penalty-free.
4. Discretionary commission markups
If a dealer arranged your finance, they might have increased your interest rate to earn extra commission. This means you could be paying far more than necessary.
How to request a copy of your PCP agreement
You can ask your lender for a copy of your original agreement under the Consumer Credit Act. If they refuse or delay, they may be trying to hide commission details. You can also request a Subject Access Request (SAR) to obtain all documents related to your finance.
The FCA’s latest update on PCP complaints
The Financial Conduct Authority (FCA) has extended the pause on motor finance complaint handling until 4 December 2025. This means lenders have more time to process complaints, but consumers should not delay in checking their agreements. If you suspect mis-sold finance, start your claim as soon as possible.
How to claim a refund for hidden charges
- Check if you had a PCP or HP agreement between 2007 and 2021.
- Request your agreement details from your lender.
- Look for any mention of broker commissions or unexplained charges.
- Use the free PCP Claims calculator to see if you qualify.
- Submit your claim with all supporting documents.
Final Thoughts
Many UK car buyers have unknowingly overpaid due to hidden charges in PCP agreements. With the FCA investigating mis-sold car finance, now is the time to check your agreement. If you financed a car before 2021, you could be owed thousands in compensation. Take action today and use the PCP Claims tool to find out if you are eligible for a refund.
