How Much Compensation Could You Receive Through Mis-Sold PCP Car Finance?

Personal Contract Purchase (PCP) car finance is used by around 90% of British motorists as a presumably affordable way to buy a new or used car. 

It allows people to pay monthly instalments for a set period, with the option to return the car, make a final balloon payment, or part-exchange it for a new vehicle. 

However, not all PCP agreements were sold fairly. Many drivers were mis-sold finance, and if this happened to you, it may be possible to claim compensation.

Statistics show that in the UK, the average successful PCP mis-selling claim can result in compensation of between £1,000 and £5,000.

Why Your PCP Finance Could Have Been Mis-Sold

PCP finance can be mis-sold for several reasons. Some dealers failed to explain how the scheme worked, including the large final payment at the end of the agreement, which many customers could not afford. 

Others did not disclose the total cost of credit or hidden fees, giving the impression that monthly payments were smaller than the true cost. 

In some cases, sales staff pressured customers into signing agreements without fully explaining the terms, or misrepresented the benefits compared to other types of finance. 

According to recent FCA findings, complaints about mis-sold car finance have increased steadily over the past five years, with PCP contracts representing a large portion of these complaints.

What Determines Your Compensation

The amount of compensation you can receive depends on several factors. Firstly, it is influenced by the interest you paid over and above what would have been fair if the agreement had been properly sold. 

If you were charged more than you should have been or signed an unsuitable agreement, the lender may be required to refund the difference. Secondly, compensation can include any additional charges, such as early termination fees or unfair add-ons, that resulted from the mis-selling. 

Your personal circumstances, such as whether you completed the contract, returned the car early, or still owe payments, also affect the final amount. In some cases, consumers have received thousands of pounds, particularly if the mis-sold finance was for an expensive or long-term agreement. 

How You Can Claim Compensation on PCP Car Finance

If you believe you were mis-sold PCP finance, you can start by contacting the lender directly. Most UK lenders have a complaints procedure where you submit a written claim outlining why the finance was mis-sold and how it affected you. 

The Financial Ombudsman Service (FOS) can intervene if the lender does not respond satisfactorily or rejects your claim. It is important to provide documents such as your finance agreement, payment history, and any correspondence with the dealership or lender. Persistence and clear evidence can significantly improve the chances of success.

Using Solicitors Versus Doing It Yourself

According to industry data, around 60% of DIY claims result in some level of compensation, though professional assistance tends to achieve higher average payouts.

“You have two main options for making a claim,” explains Gavin Cooper, founder of Claims Bible, a team that helped Brits claim millions on mis-sold products and financial agreements.

“One is to instruct a solicitor or claims management company to handle the case. These professionals often work on a “no win, no fee” basis, charging a fee of 20-30% of the compensation if the claim is successful.” 

“Using a solicitor can simplify the process” he continues, “especially for complex claims or high-value agreements, and often increases the likelihood of success because of their experience with mis-selling cases.”

“The second option is to claim yourself, which is free. You can submit a complaint directly to the lender and escalate to the Financial Ombudsman if needed.”

“While this avoids fees, results are not guaranteed, and the process can be more time-consuming.”

Conclusion

Being mis-sold PCP car finance can leave you paying far more than necessary for a vehicle. The amount of compensation depends on how unfairly the finance was sold, the costs you incurred, and your personal circumstances. 

Claims can be made directly to lenders, escalated to the Financial Ombudsman, or handled through solicitors for a professional approach with a fee. Understanding your options, gathering evidence, and acting quickly are key to recovering the money you are entitled to. 

Whether you go through a solicitor or do it yourself, thousands of UK drivers have successfully reclaimed unfair payments, highlighting the importance of taking action if you were mis-sold PCP finance.