What is mis-sold car finance and could you be due thousands in compensation?

If you bought a car, van, motorbike, motorhome or caravan on finance, you could be among the millions of consumers eligible for a significant refund.

The UK financial regulator, the FCA (Financial Conduct Authority), is currently carrying out an investigation into the scale of mis-sold vehicle finance, with millions expected to be in line for refunds.

The FCA estimates that hidden PCP and HP finance commissions have cost consumers more than £1,100 in additional interest charges on a typical £10,000 finance agreement.

It’s due to set out its next steps in May 2025, and the results could entitle millions of drivers across the country to thousands of pounds in compensation.

Drivers who bought multiple vehicles on finance and those who financed larger amounts are expected to be due the most back.

Martin Lewis, consumer champion, has compared the potential scale of payouts to the PPI scandal - where firms were forced to refund billions to mis-sold customers.

But, to make a legitimate claim, you'd need to have taken out a PCP (Personal Contract Purchase) or HP (Hire Purchase) agreement through a car garage, dealer or broker.

We explain how these agreements work and how to quickly find out if you can claim compensation.

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What is an HP agreement?

Under a HP agreement, you'll work towards one objective - to own the vehicle.

What is PCP car finance? 

PCP finance allows you to drive a vehicle with lower monthly repayments than HP finance, but you won’t necessarily own the vehicle at the end of the repayment period.

Under a PCP agreement, your lender will consider how much your vehicle is expected to drop in value over a specified timeframe to determine your monthly repayments.

Like other forms of financing, you'll need to maintain your repayments or risk damaging your credit score.

Have you taken out either of these types of finance agreements? 

Have you bought a car, van, motorhome or caravan using PCP or HP finance? If so, you could be a victim of mis-sold vehicle finance and be eligible for a significant refund.

How to claim compensation

To see if you’re eligible for compensation,. 

Their team of claim specialists and legal partners have been fighting for the rights of consumers for over a decade. As a regulated law firm, you can be assured that your mis-sold vehicle finance claim is in safe hands.