If you purchased a car using PCP finance during 6 April 2007 and 1 November 2024, you could be eligible for compensation of £830 per finance agreement.
The is because millions of motorists in the UK could be affected by car finance mis-selling and the FCA has introduced a motor finance compensation scheme to help customers who were treated unfairly or sold hidden commissions through car dealers and brokers.
If you purchased your vehicle using Personal Contract Purchase (PCP) or Hire Purchase (HP), you can submit an application to the finance provider and in 3-6 months you will find out if you are due compensation.
Whilst You can make a car finance claim directly with your lender for free, there are claims specialists who can help process your application for you. Please note that they operate on a no-win, no fee basis and that they will charge a commission if your claims application is successful.
Companies That Can Help With PCP Car Finance Claims (Fees Apply)
Key Points
If you purchased a vehicle in the UK using PCP or HP finance during 6 April 2007 and 1 November 2024, you could be eligible for compensation.
The scheme applies only to vehicles used for personal use (not business use)
The average compensation is £830 per vehicle – the minimum is £120 and the maximum could be a few thousand.
FCA data suggests there are 12.1 million agreements that are eligible and each UK household is likely to have least 2 vehicles that could receive a refund.
The deadline for making a PCP car finance claim is likely to be towards the end of 2027 – after this, no more claims will be eligible.
About Mis-Sold PCP Car Finance Claims
The FCA has approved a scheme whereby more than 12.1 million car finance agreements will be refunded due to hidden commission by finance providers, brokers and dealers that took place between 6 April 2007 and 1 November 2024.
However, the money will not be automatically refunded, motorists that had purchased vehicles using PCP or HP finance during this time must go and reclaim this money back from the finance provider.
You can do this for free following instructions by the FCA or Financial Ombudsman Service – or you can use an agent or claims firm, but note they may charge up to 30% commission for helping you process it.
The Hidden Commissions
Discretionary Commission Arrangements (DCAs) allowed car dealers or brokers to influence the interest rate offered to customers. In some cases, dealers could increase the interest rate to earn a higher commission, meaning customers paid more for their finance without being told how the arrangement worked. The FCA banned this practice in January 2021.
Non-discretionary commission arrangements involved commissions that were not linked to changing the customer’s interest rate. These could include flat-fee or fixed commission payments, which were not always properly disclosed.
When is The Deadline For Claiming Mis-Sold Car Finance?
There is currently no guaranteed date for receiving a decision or refund. The scheme has faced legal challenges, with a tribunal hearing scheduled for February–March 2027. If the scheme is upheld, payments are expected to begin during 2027. The usual response and payment timetable has therefore been disrupted.
If you have not yet complained, you should consider contacting your lender as soon as possible. The general deadline for customers who have not been contacted by their lender is 31 August 2027, although individual circumstances and scheme rules can affect this.
Which Companies Can I Make a Car Finance Claim Against?
You may be able to make a car finance claim against a range of lenders and finance providers including:
Alphera, Audi, Barclays, Black Horse, BMW, CA Auto Finance, Car Loan Centre, Citroën, Close Brothers, Clydesdale Bank, Ford, Halifax, Honda Finance, Hyundai Finance, Jaguar, Mazda, Mercedes Finance, Motonovo, NIIB, PSA Finance, Santander Consumer Finance, Stellantis Financial Services, Toyota Finance, Vauxhall Finance, Volkswagen Finance and Zopa.
Not every agreement with these providers will qualify, so your finance provider and agreement details will need to be checked.
What is The Eligibility For a PCP Refund?
You could be eligible if:
You purchased a vehicle using car finance between 6 April 2007 and 1 November 2024 in the UK
Purchased using PCP or HP finance
Vehicles for person use only (not for business purposes)
Cars, vans, motorbikes, and campervans
First hand or second hand cars considered
Did not need to own or pay off the vehicle in full
Eligible vehicles can include cars, vans and motorcycles purchased for personal use. Both Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements can qualify.
You do not necessarily need to have owned the vehicle outright, and eligibility depends on the circumstances of your finance agreement rather than simply the type of vehicle purchased.
The scheme covers qualifying agreements from this period, subject to its specific eligibility rules. (Source: FCA)
What Documents Do I Need To Make a PCP Car Finance Claim?
You do not necessarily need your original finance agreement to make a claim. However, having your finance paperwork, vehicle purchase invoice, finance provider details, bank statements and information about when you purchased the vehicle can help identify your agreement.
If you no longer have these documents, your lender or dealership should be able to retrieve the relevant information.
Where Do I Submit My Application For a Car Finance Claim?
You can submit your car finance complaint directly to the finance provider that arranged your agreement e.g VW, BMW, Blackhorse. The FCA provides a list of lenders and their complaint contact details, including links to relevant complaint forms.
If you are unsure which company provided your finance, you can check previous bank statements, your credit report or contact the dealership where you purchased the vehicle.
What is The Average Compensation For a Car Finance Claim or PCP Refund?
The FCA estimates that successful claimants will receive approximately £830 per eligible finance agreement.
However, this is an average rather than a guaranteed payment. Your compensation will depend on the commission arrangement, the amount of interest paid and the circumstances of your agreement. If you financed multiple vehicles, you could potentially receive compensation for more than one agreement.
How Long Does It Take For a Car Finance Claim To Be Paid Out?
There is currently no guaranteed timescale for car finance compensation because the FCA’s redress scheme is subject to legal challenges.
A tribunal hearing is scheduled for February–March 2027, and payments could begin during 2027 if the scheme proceeds. Once a compensation offer has been accepted, lenders will generally have one month to make payment. The time taken to investigate individual complaints may vary.
Do I Need To Pay Anything To Make a Car Finance Claim Application?
No, you can make a car finance claim completely free by contacting your lender directly. However, there are claims management companies and brokers who can help process your application on your behalf.
Be aware that some charge success fees of 15%, 20% or 30% of your compensation, meaning you could lose a significant proportion of your refund. Always check the fees and terms before signing an agreement.
FAQs
How is the compensation amount calculated?
The compensation for mis-sold car finance is calculated by refunding the difference between what you actually paid and what you would have paid if the lender hadn’t secretly increased your interest rate to make more commission.
For standard cases, this estimated loss is calculated as a percentage discount of the extra interest you were overcharged, which is set at 17% for agreements entered into from April 2014 onward, and 21% for earlier agreements between April 2007 and March 2014. On top of this interest discount refund, you receive statutory interest to compensate you for the time you were out of pocket.
While serious cases of high commission might result in a 100% refund of that commission, the Financial Conduct Authority (FCA) estimates the average total payout is around £830 per agreement.
Do I get the full car finance amount as a refund?
No, you do not get the full car finance amount refunded to you, only the amount that was mis-sold to you as a hidden commission and in some cases a small interest on top.
I have received an SMS about reclaiming a car finance refund – is it legit?
Receiving an SMS about mis-sold car finance might be legitimate, but you should always check that the company is real and trustworthy before responding. Messages are often sent by brokers or claims management companies looking to process your application in return for commission. Check the company against the FCA Register and be cautious about clicking unfamiliar links or sharing personal and banking information.
Can I still apply for a PCP refund even if I do not have the original documents?
Yes, you may still be able to make a claim if you know the name of your car finance provider and approximately which years you purchased your vehicle. Previous bank statements, credit reports and dealership records can also help locate your agreement.
What happens if my car finance claim is denied? Can I reapply?
The FCA’s general deadline for customers who have not been contacted by their lender is 31 August 2027. However, different deadlines and eligibility rules can apply depending on your agreement and circumstances, so it is advisable to complain as soon as possible.
Can I get a PCP refund for business vehicles?
The FCA’s compensation scheme generally excludes agreements taken out for business purposes. Personal-use agreements are covered if they meet the relevant eligibility criteria.
Can I claim back on vehicles that I am no longer using?
Yes. You do not need to own or use the vehicle anymore to make a claim. Previous finance agreements can still qualify, provided they meet the relevant dates and eligibility requirements.
Does my claim matter if I paid or did not pay the car finance in full?
No. You can potentially claim whether you have fully repaid your finance agreement or are still making monthly payments. Eligibility depends on the original finance agreement and whether it involved qualifying unfair commission arrangements.
Can a claim be made for someone’s vehicle even if they are no longer alive?
Yes. A claim can potentially be made on behalf of someone who has passed away. Their personal representative, executor or eligible beneficiary can contact the finance provider to make a complaint on behalf of the deceased person’s estate. You may need to provide a death certificate, grant of probate or other supporting documentation.
