It’s fair to say that the UK has a passion for cars. A desire to own the latest model leads many people to take out car finance deals. These packages (particularly Personal Contract Plans, or PCPs for short) are usually designed to convince the driver that they’re getting a great deal – particularly when compared to hire-purchase packages. The problem is, on many occasions they were mis-sold to the people that agreed to them because their suitability wasn’t properly assessed, or the obligations and risks not properly explained.
A PCP is similar to any type of personal loan. It usually runs for a set period – in the world of cars, this is typically between two and four years. The loan amount is worked out based on the anticipated depreciation of the car during this time. Once the deal period is over, the driver can opt to make a balloon payment – a sum that’s equal to the estimated worth of the car at that point. They’ll then own the car outright.
Although this sounds good on paper, there are several potential issues with car finance packages, and PCPs in particular. For example, the lack of clarity regarding what the individual will actually owe is a major problem. In fact, the FCA published a report, stating that over 560,000 consumers were paying 50% more on their car finance packages than they should be.
Am I owed compensation for mis-sold car finance?
Did you take finance for your car? There’s a possibility you were overcharged.
The FCA found that some dealerships and finance companies have been overcharging by up to £1,100 a deal. In some cases, it might have worked out better financially to opt into a hire-purchase package instead.
As PCPs are essentially interest-only loans, interest charges can be more expensive than anticipated.
If you feel that this wasn’t adequately explained to you when you agreed to the deal, then this is further grounds for making a mis-selling claim.
Here are some examples of circumstances where you might have been mis-sold a car finance package:
I want to claim for car finance mis-selling – what happens now?
Although car finance mis-selling is a relatively new scandal, our team understand the marketplace well and are ready start the process for you today. Customer care is at the heart of what we do, and to date, we’ve successfully won over £100 million in compensation for clients that have been mis-sold a financial product.
If you’ve taken out a car finance package pick up the phone today and talk to one of our team. After running through your situation, we’ll ascertain whether or not you’re in a position to make a claim.
To start the process, call today on 0161 302 6510, email email@example.com. Alternatively, you can enter your details in the footer of this page and we’ll call you back.
PCP Compensation and mis-selling
PCP plans are currently the most popular financing method for car buyers. With a PCP plan, you pay an upfront deposit, followed by monthly payments. This is similar to a hiring plan (HP) but the monthly payments are lower. This makes premium vehicles more accessible than they would be through a traditional car loan.
There are two important differences between a PCP and a traditional car loan from a bank. The first is that the customer doesn’t own the car at the end of the deal. If you wish to buy the car after your period of monthly payments, you’ll need to pay an optional final payment, also known as a “balloon payment”. The second important difference is that with PCPs, the car dealer also acts as the financial broker.
They are the ones to calculate the deal, including the interest rate. Charging a higher interest rate results in a larger commission for the seller, creating a conflict of interest that many customers aren’t aware of when they agree to a deal.