Millions of people in the UK may have been mis-sold their car finance deal. Our panel of car finance solicitors can let you know if you are eligible for thousands from a mis-sold PCP finance agreement claim.
If you bought a car using finance such as PCP (Personal Contract Purchase) or HP (Hire Purchase) between 2007 and 2021, you may have been mis-sold your agreement. Many drivers across the UK were unknowingly charged higher interest rates because dealers and brokers were able to earn bigger commissions at their expense.
This practice, known as a Discretionary Commission Arrangement (DCA), meant that instead of finding the best finance deal for you, the dealer had a financial incentive to increase your costs. In many cases, customers were not told about the commission at all, leaving them in the dark about why their finance was more expensive than expected.
If you had one of these finance agreements, you may be entitled to compensation.
Start your claim today on our dedicated sister site, Claim.co.uk.
What is a PCP agreement?
A Personal Contract Purchase (PCP) is essentially a loan to help purchase a car. Car dealerships offer them for those who do not have the upfront cash to purchase a vehicle.
However, unlike a normal personal loan, you won’t be paying off the full value of the car, and you won’t own the car at the end of the deal, unless you agree to pay the final balloon payment.
The agreement normally has three parts:
- The deposit – usually around 10% of the car’s price
- The amount you borrow
- The balloon payment – A large final payment if you want to own the car
You can potentially face extra charges throughout this agreement, however. These include:
- Over-mileage charges
- Damage charges
FCA Update: Supreme Court and Redress Scheme
On 1 August 2025, the Supreme Court gave clarity on mis-sold car finance claims. The Court decided that commission payments on their own are not automatically unlawful. However, if the commission was unfairly high, hidden from the customer, or if you were misled about the terms, then the finance agreement could still give rise to compensation.
In response, the Financial Conduct Authority (FCA) has announced plans for a major redress scheme worth between £9 and £18 billion. The scheme will cover PCP and HP car finance agreements taken out from 2007 onwards. A formal consultation will begin in October 2025, with compensation payments expected in 2026.
How Much Is Mis-sold PCP Claim Worth?
Reports suggest that consumers have been charged thousands more than they should have been. The exact amount of compensation a claim might be worth will depend on your individual case, and our panel of car finance solicitors will inform you how much you could look to claim.
There are several factors to consider when working out how much compensation you could be owed. These include:
- The size of the loan – the larger the loan, the more you’ll be owed
- When you signed up – the longer you have been paying the loan off, the more you’ll be owed
- The interest rate and the difference between the rate you should have been quoted
How Much Compensation Could You Receive?
The FCA has said most people will receive less than £950 per agreement. This means that if you had more than one finance agreement in the period, you could be owed more. For example, two eligible agreements could result in up to £1,900 in compensation.
The amount you can claim back in refunds is dependent on how much the original loan was, what the interest rate was, and how long the car finance agreement was for.
FCA Statement – 03.08.25 – The FCA have said most people will receive less than £950 per agreement. You can read their statement here.
Who Can Make a Mis-Sold Car Finance Claim?
You may be eligible if:
- You bought a car using PCP or HP finance between 2007 and 2021
- The dealer or broker did not clearly explain that they were earning commission
- This commission was tied to the amount of interest the broker charged
- You were charged a higher interest rate than necessary
- You felt pressured into taking a deal without being given other options
- The agreement was not explained properly and you could not make an informed choice
Many well-known finance providers were involved in these types of commission arrangements, including Alphera, Black Horse, Blue Motor, Close Brothers, Hyundai Finance, Land Rover Finance, MotoNovo, Santander, and Volkswagen Financial Services.
“Some motor dealers are overcharging unsuspecting customers over £1000 in interest charges in order to obtain bigger commission payouts for themselves. This is unacceptable.”
Jonathan Davidson, director of supervision for retail and authorisations at the FCA
Why Were Car Finance Deals Mis-Sold?
The issue comes down to conflict of interest. Dealers were supposed to arrange finance that suited the customer.
But with DCAs, they were rewarded for raising interest rates – often adding hundreds or even thousands of pounds to the overall cost of the loan.
In many cases, customers were never told how much commission the dealer would receive or that their loan cost more because of it. The FCA investigated and found widespread harm, banning the practice in January 2021.
How Is Compensation Calculated?
Compensation is usually based on the amount you overpaid due to hidden commission. Factors include:
- The size of your finance loan
- The interest rate you were charged compared to a fairer rate
- The length of your agreement and how much you repaid
- Whether one or multiple agreements were affected
The legal panel working with Claim.co.uk will assess your finance history and calculate what you may be owed.
What Can You Claim For?
- Overpayment of interest caused by hidden commission
- Lack of transparency and poor advice when you signed your finance agreement
- Compensation for unfair terms in your car finance contract
Start Your Claim Today
Our simple process helps you check your eligibility in minutes. You don’t need paperwork – our system can find car finance agreements directly from your credit report and identify which ones may have been mis-sold.
Start your claim now at Claim.co.uk.
Important Information
Fairweather Group Ltd (t/a Emissions.co.uk) is a Claims Management Company authorised and regulated by the Financial Conduct Authority (FRN: 935899). We do not provide legal advice – your claim will be handled by an SRA-regulated law firm. You can claim for free, either directly or via the Financial Ombudsman Service. No Win No Fee fee: up to 36% (inc. VAT). You can cancel within 14 days at no cost, but cancellation fees may apply after this period. Eligibility and claim outcomes depend on your individual circumstances and a proper investigation. We receive a fee after a successful payout or a referral fee from your solicitor and this does not affect the compensation you will receive.
While car finance claims are under the remit of the FCA, we'd like to clarify that diesel emission claims are not.