How do I know if i was mis-sold car finance online?
Car finance has helped millions of people buy vehicles they couldn’t afford upfront. However, some lenders and brokers have misled customers, resulting in mis-sold agreements. If you suspect your deal was unfair, this guide will help you spot the signs and take action.
What Does Mis-Sold Car Finance Mean?
Mis-sold car finance occurs when lenders fail to provide clear, honest, or legally required information. It also includes cases where brokers received undisclosed commissions that affected the deal. If you were pressured into a loan or given misleading terms, you might have a claim.
Key Signs You Were Mis-Sold Car Finance
1. Undisclosed Commission
Many brokers earned commissions from lenders without telling customers. The Financial Conduct Authority (FCA) found that some dealers increased interest rates to boost their earnings. If your lender failed to disclose commission details, your agreement could be unfair.
2. High-Interest Rates Without Justification
Lenders should base interest rates on your credit score and financial circumstances. If your rate was inflated due to hidden commissions, you may have mis-sold finance. The FCA banned this practice in January 2021, but older agreements might still be affected.
3. Lack of Proper Affordability Checks
Car finance providers must ensure customers can afford repayments. If you weren’t asked for proof of income or your financial situation wasn’t assessed, the deal may have been mis-sold. This is especially relevant if payments have caused financial hardship.
4. Misleading or Incomplete Information
You should have received clear details about interest rates, fees, and total repayment amounts. If terms were vague or hidden in small print, you might have been misled. Some dealers also failed to explain the differences between PCP (Personal Contract Purchase) and HP (Hire Purchase) properly.
5. Pressure to Sign Without Full Understanding
Were you rushed into signing without enough time to review the agreement? High-pressure sales tactics are a red flag. If you felt forced into a deal, it might have been mis-sold.
How the Car Finance Scandal Affected Consumers
The car finance scandal has exposed how lenders and brokers profited at the expense of customers. Many drivers unknowingly paid inflated interest rates because of hidden commission agreements. The FCA’s crackdown on these unfair practices has led to increased scrutiny, with thousands of people now investigating whether they were mis-sold finance.
How to Check If You Have a Mis-Selling Claim
Step 1: Review Your Car Finance Agreement
Check your contract for commission details, interest rates, and total repayments. If commission wasn’t mentioned or the rate seems excessive, you may have a claim.
Step 2: Request a Copy of Your Agreement
If you don’t have the original contract, request it from the lender or broker. They must provide this under the Consumer Credit Act 1974. Look for any hidden charges, fees, or clauses you weren’t told about.
Step 3: Ask the Lender About Commission Disclosure
Under FCA rules, lenders must confirm whether they paid commission to a broker. If they refuse or give vague answers, it suggests something was hidden.
Step 4: Check Your Credit Reports and Statements
Review your credit history to see if payments match what you expected. Look for unexpected charges, unexplained fees, or inconsistencies in repayments.
How to Make a Claim for Mis-Sold Car Finance
1. Complain Directly to the Lender or Broker
Start by submitting a formal complaint explaining why you believe the finance was mis-sold. Include evidence such as emails, contracts, or credit statements.
2. Escalate to the Financial Ombudsman Service (FOS)
If the lender rejects your complaint, you can escalate it to the FOS for free. They will investigate and decide if compensation is due. In 2023, over 80% of cases involving undisclosed commission resulted in refunds.
3. Seek Legal Advice If Necessary
If you’re unsure about your claim, a solicitor or claims specialist can help. Some firms work on a ‘no win, no fee’ basis, but always check their terms before signing up.
Why Car Finance Claims Have Increased in the UK
With more people becoming aware of their rights, car finance claims have risen sharply in recent years. Many drivers have successfully reclaimed thousands of pounds after discovering they were mis-sold finance. As awareness grows, more cases are being investigated, leading to potential refunds for those affected.
How Much Compensation Could You Receive?
Refunds vary depending on the case, but they often include interest overpayments and charges. Some drivers have reclaimed thousands of pounds from mis-sold agreements. If your deal involved hidden commissions, you could be entitled to a full or partial refund.
Final Thoughts
If you suspect you were mis-sold car finance, don’t ignore it. Reviewing your contract, checking for hidden commissions, and raising a complaint could help you recover lost money. The FCA has cracked down on unfair practices, but many drivers are still unaware of their rights.
Take action today by requesting your agreement and challenging any unfair terms. If a lender or broker failed to be transparent, you could be owed compensation.
