Car finance agreements help people spread the cost of a vehicle over time. Two of the most common finance options are Personal Contract Purchase (PCP) and Hire Purchase (HP). If a finance agreement was mis-sold, you may be eligible to claim compensation.
What is Personal Contract Purchase (PCP)?
PCP agreements let you pay lower monthly instalments than traditional loans. At the end of the contract, you can return the car, make a final payment, or refinance. Many people choose PCP because of its flexibility, but some lenders fail to explain key details.
Lenders must provide full transparency on interest rates, fees, and mileage limits. If they mislead you or hide costs, you may have a claim. Mis-selling often happens when dealers exaggerate affordability or fail to explain balloon payments.
How Hire Purchase (HP) Works
HP agreements allow you to own the car outright after the final payment. Unlike PCP, there is no large balloon payment at the end. Monthly payments are higher, but you fully own the vehicle when the contract ends.
Dealers must explain the total repayment cost, interest rates, and penalties. If they mislead you about fees or affordability, you may have a claim. Many customers are unaware of hidden charges, making them eligible for compensation.
Common Ways PCP & HP Were Mis-Sold
Many people were given car finance deals without proper affordability checks. Some dealers failed to explain balloon payments and mileage restrictions. Others encouraged customers to take finance despite poor credit ratings.
Lenders must provide clear information about total costs and contract terms. If they failed to do this, you may have mis-sold finance. The Financial Conduct Authority (FCA) requires lenders to act fairly and transparently.
Signs You Were Mis-Sold PCP or HP
If you were not given full details about the finance agreement, you may have a case. Mis-selling includes hidden fees, unclear interest rates, and misleading affordability checks. Many customers only realise they were mis-sold when they struggle with payments.
Your dealer should have explained key financial obligations clearly. If they pressured you into a deal or provided incorrect information, you may be entitled to a refund. Reviewing your contract can help identify any signs of mis-selling.
How to Check If You Have a Claim
First, gather all documents related to your car finance agreement. Check if you were properly informed about interest rates, fees, and the total repayment amount. If key details were missing, you may have mis-sold the agreement.
Many customers discover they overpaid due to hidden commissions. Dealers often received undisclosed commissions, making finance more expensive. If this applies to you, you could reclaim the extra money you paid.
You can check your free Mis-sold Car Finance Payout calculation through PCP Claims.
How Much Can You Claim Back?
The amount you can claim depends on the level of mis-selling. If hidden commissions increase your costs, you could receive thousands in compensation. Refunds often include excess interest charges and fees.
Lenders must prove they acted fairly when selling finance agreements. If they cannot provide evidence of full transparency, they may have to issue refunds. Each case is different, so claim amounts vary based on individual circumstances.
Steps to Make a PCP or HP Claim
- Check Your Agreement – Review your finance contract and look for unclear fees or commissions.
- Gather Evidence – Collect statements, emails, and paperwork proving mis-selling.
- Contact Your Lender – Request a breakdown of fees and any hidden commissions.
- Make a Complaint – Submit a formal complaint to your lender detailing how you were mis-sold.
- Escalate If Needed – If your lender rejects your claim, take it to the Financial Ombudsman Service (FOS).
Why Undisclosed Commissions Matter
Many lenders paid car dealers commissions to push finance deals onto customers. These commissions were often hidden, increasing the total repayment cost. Customers who were not informed about these commissions may be entitled to refunds.
If a dealer did not tell you about a commission, this could be a case of mis-selling. Courts have ruled in favour of customers, leading to successful compensation claims. Checking your finance agreement can reveal whether you were affected.
How Long Does a Claim Take?
PCP and HP claims usually take a few months to process. If your lender cooperates, a refund may be issued within 8 to 12 weeks. If they reject your claim, the Financial Ombudsman Service can take several months to investigate.
Providing strong evidence speeds up the process. If you lack documents, lenders may delay your claim. A well-documented case improves your chances of receiving compensation quickly.
Can You Claim If Your Agreement Is Paid Off?
Yes, you can still claim compensation even if you have finished paying for your car finance. Many successful claims involve agreements that ended years ago. As long as you were mis-sold, you have the right to claim.
The standard time limit for claims is six years from the agreement date. In some cases, you may have extra time if you only recently discovered the mis-selling. Speaking to a claims expert can help determine your eligibility.
Final Thoughts
If you believe you were mis-sold car finance, you have the right to seek compensation. Hidden fees, undisclosed commissions, and misleading information are common issues. Checking your agreement and making a claim could help you recover lost money.
Lenders must treat customers fairly and provide clear information. If they failed to do this, you may be entitled to a refund. Seeking professional advice can help ensure your claim is handled correctly.
