What is mis-sold vehicle finance and what is
involved in bringing a claim ?

Inflated and unfair interest rates, hidden commission charges, and the absence of proper affordability assessments are stark examples of tactics employed by unethical salespeople to take advantage of those looking to purchase a vehicle.

The financial ramifications of car finance claims, including compensation payouts and legal costs, directly affect lenders’ bottom line. The potential for economic loss can be a powerful motivator for companies to maintain fair lending standards in the future to avoid lawsuits.

In a nutshell, whenever you suspect that the lender was not honest when they sold you the finance agreement. Here are some situations where you can make a car finance claim:

• Mis-sold Finance: If the credit was not suitable for your needs or financial situation, and this was not adequately assessed or explained to you, you might have grounds for a claim. This includes not being fully informed about the interest rates, terms, or total cost of the offer.
• Lack of Affordability Checks: Lenders are required to conduct affordability checks to ensure you can comfortably meet the payment obligations. If they failed to perform these checks properly, leading you into financial distress, you may be eligible for a claim.
• High and Unfair Interest Rates: If the interest rates applied to your car finance are excessively high compared to the market rate at the time of the agreement, and you were not properly informed about this, you may be able to claim, particularly if your credit risk did not justify the high rates.
• Undisclosed Commission Fees: If the commission earned by the lender or broker from selling you the credit product unjustly biased their recommendation, then you may have grounds to sue.
• Incorrect Information or Misrepresentation: If you were provided with inaccurate information or the terms and conditions of the loan were misrepresented to you, leading to an unsuitable agreement, this could warrant a claim.
• Early Settlement Issues: If you were penalized for settling your loan early or were not informed about your rights and the process for early settlement, you might be eligible to make a claim.
• Voluntary Termination Rights: Under certain agreements, you can return the vehicle and terminate the agreement after paying off a specific portion of the loan. If these rights were not clearly explained to you, or you were obstructed in exercising them, you may have grounds for a claim.

How Long Does the Claims Process Take?

The claims sector has many variables at play, and it can be a very complex industry, so the length of a claim can vary. As of early 2024, the Financial Conduct Authority (FCA) is investigating the mis-selling scandal within the car finance industry. The current timeframe is that the FCA expects to complete their investigation in September 2024. When the investigation closes, they will announce their next steps, which may involve implementing a redress scheme. If, as we anticipate, they rule that consumers have been mis-sold, this scheme will outline how much compensation will be awarded and how the compensation will be paid to consumers. However, until then, a lot is unknown, and we won’t know much about the next steps until the FCA finalizes their investigation. Our best estimate is that it could take between three to six months for claims to be processed after the redress scheme is confirmed.

There is no set deadline for submitting your car finance claim. If the FCA announces a redress scheme, they may also confirm a time limit by which people must put in a claim. They may also limit compensation to claims made after a certain date. It’s highly recommended that you submit your claim as early as possible. Lenders will likely have to deal with large volumes of car finance claims, so you will avoid delays and be placed higher on the list if you start your claim today. Once your details are registered, you can sit back and relax until the FCA announces the next steps later this year.

How to Start Your Car Finance Claim

If you find yourself in any of these situations, the first step is usually to contact your credit provider to discuss the issue. If dissatisfied with their response, you can escalate your claim through formal complaint channels, such as the Financial Ombudsman Service in the UK, or talk to our team to understand your options and the best course of action.

Use our free eligibility checker to see if you can claim. The check takes less than two minutes.

Car finance claims are pivotal in maintaining industry integrity, protecting consumer interests, and ensuring that lenders who engage in unethical practices are held accountable. The process seeks to rectify individual grievances and aims to foster a fairer, more transparent car finance industry.

If you would prefer us to do the work for you simply complete your information in the eligibility checker and we will ensure that you receive the compensation that you deserve.