How to Identify and Address Unfair Agreements
Mis-sold car finance is an increasing concern in the UK, affecting thousands of vehicle owners who took out finance agreements such as Personal Contract Purchase (PCP) or Hire Purchase (HP). If you suspect that your car finance agreement was not set up correctly or that crucial details were withheld, you may be entitled to claim compensation.
What Is Mis-Sold Car Finance?
Mis-selling occurs when a car finance agreement is provided with misleading or unclear information, hidden charges, or without proper affordability checks. The Financial Conduct Authority (FCA) has investigated numerous cases where finance agreements contained undisclosed commission structures or unfair interest rates.
With the FCA estimating that commission was paid on 95% of car finance agreements, and up to 40% of these may have been mis-sold, the scale of the issue is significant. In fact, industry experts predict that compensation claims could reach £16 billion.
Signs That Your Car Finance Was Mis-Sold
If you have concerns about your car finance agreement, watch out for these warning signs:
1. Undisclosed Fees and Commission
Many car dealers receive commission from finance providers when arranging agreements. If you were not informed about this commission or if it resulted in a higher interest rate for you, your finance may have been mis-sold.
2. Lack of Affordability Checks
Lenders are required to assess a borrower’s financial situation to ensure they can afford repayments. If your income, expenditure, or credit history was not properly reviewed, you may have been placed into an unaffordable agreement.
3. Misleading or Incorrect Information
Did the dealer promise you would own the car outright at the end of the agreement, only to find there were balloon payments? Or were you told there would be no extra fees, only to be hit with unexpected charges? Any misleading information could indicate mis-selling.
4. High-Pressure Sales Tactics
If you were pressured into signing quickly without being given time to review the agreement properly, you may not have received the full picture. Dealers must allow customers to make informed decisions.
Why Mis-Selling Matters
The consequences of mis-sold car finance can be severe, including:
- Overpaying on Interest and Fees: If commission structures increased your interest rate unfairly, you may be paying more than necessary.
- Negative Impact on Credit Score: If the agreement was unaffordable from the start, missed payments can harm your credit rating.
- Limited Options for Early Termination: Some agreements include unfair early exit penalties, making it costly to leave the contract.
How to Check If You Have a Mis-Sold Agreement
If any of the above signs sound familiar, take the following steps:
- Review Your Paperwork – Gather your finance agreement, correspondence, and any marketing materials you were given.
- Check for Hidden Charges – Look for additional fees, balloon payments, or higher-than-expected interest rates.
- Compare Market Rates – If your interest rate is much higher than others available at the time, this could indicate mis-selling.
- Seek Professional Advice – A solicitor or financial expert can assess whether your agreement was mis-sold and guide you on your next steps.
At Baker Hardman Solicitors, we specialise in financial mis-selling claims and can help you determine whether you have a valid case. Our experienced team can guide you through the claims process, ensuring you receive the compensation you deserve.
If you suspect you were mis-sold car finance, don’t delay—contact Baker Hardman Solicitors today for a free consultation.
