If you’ve taken out a Personal Contract Purchase (PCP) finance agreement for a car, you may be eligible for a refund. Many car buyers were mis-sold PCP deals without understanding the full financial implications. This guide explains everything you need to know about PCP claims, your rights, and how to claim compensation.
What Is PCP Finance?
PCP is a type of car finance where you pay an initial deposit followed by fixed monthly payments. At the end of the agreement, you can either pay a final lump sum (balloon payment) to own the car, return it, or trade it in for a new deal. Many people choose PCP because of its lower monthly costs compared to traditional loans. However, lenders often failed to explain the full costs and risks involved.
Why Are PCP Claims Being Made?
PCP claims arise when customers are mis-sold finance agreements by dealers or lenders. This typically happens when crucial financial details are not properly disclosed. For example, some lenders failed to inform customers about commission structures that made PCP deals more expensive. Others didn’t fully explain interest rates, fees, or the final balloon payment. Many drivers only realised later that they had been overcharged or misled.
Who Can Make a PCP Claim?
You could have a valid PCP claim if:
- You weren’t told about hidden commissions paid to the dealer, increasing your loan cost.
- The lender failed to clearly explain the interest rates and repayment structure.
- You were pressured into a PCP deal without understanding the financial commitment.
- The total repayment cost was not properly outlined, leaving you with unexpected fees.
If any of these apply, you may be entitled to compensation. In some cases, lenders have refunded thousands of pounds to affected customers.
How Much Could You Claim?
The amount you can claim depends on how much you were overcharged. Some drivers have received refunds covering excess interest, commissions, or fees. Compensation could range from a few hundred to several thousand pounds. The Financial Conduct Authority (FCA) is investigating these practices, which may result in further refunds. If you suspect mis-selling, it’s worth checking your agreement and seeking advice.
How to Start a PCP Claim
If you believe you were mis-sold a PCP deal, follow these steps:
- Check Your Finance Agreement – Look for details about interest rates, commissions, and total repayment costs.
- Gather Evidence – Keep records of your contract, payments, and any communication with the lender.
- Contact the Lender – Ask for details about commission payments and request a refund if applicable.
- File a Complaint – If the lender refuses, escalate your claim to the Financial Ombudsman Service (FOS).
- Seek Legal Advice – If necessary, a solicitor specialising in financial mis-selling can help with your case.
Is There a Deadline for Making a Claim?
Yes, PCP claims are subject to time limits. Typically, you have six years from the date of the agreement or three years from when you discovered the issue. If you’re unsure, it’s best to act quickly to avoid missing the deadline.
Should You Use a Claims Management Company?
While claims management companies (CMCs) offer to handle PCP claims, they often take a percentage of your compensation. You can make a claim yourself for free by contacting the lender directly or using the Financial Ombudsman Service. If you need legal support, consider seeking a solicitor who specialises in financial claims.
Final Thoughts
PCP claims offer a chance to recover money if you were mis-sold a car finance agreement. Many people paid more than they should due to hidden commissions or unclear contract terms. If you believe you were affected, check your agreement and take action before the deadline passes. With millions of pounds potentially owed to consumers, it’s worth investigating whether you have a valid claim.
Sources:
- Financial Conduct Authority (FCA) – Investigation into car finance mis-selling
- Financial Ombudsman Service (FOS) – Guidelines on PCP finance complaints
- Various case studies of successful PCP claims settlements