If you’ve financed your car using a Personal Contract Purchase (PCP) or Hire Purchase (HP) agreement, there’s a possibility that you’ve unknowingly paid more than you should have. Mis-sold car finance is unfortunately widespread, with hidden commissions, inflated interest rates, and other unfair practices leaving many consumers out of pocket.
At Baker Hardman Solicitors, we specialise in identifying and challenging mis-sold finance agreements, and we’re here to guide you through how to investigate your agreement and potentially recover significant amounts of money.
What Is PCP?
Personal Contract Purchase (PCP) is a commonly used car finance option that allows you to make lower monthly payments by financing the depreciation of the car, rather than its full value. At the end of the agreement, you generally have three options:
- Return the car to the finance company with no further payments.
- Make a large balloon payment to own the car outright.
- Trade in the car and start a new agreement on a different vehicle.
While the initial lower payments seem attractive, PCP agreements often come with hidden costs.
Common Issues with PCP Agreements:
- Hidden Commissions: Dealers frequently fail to disclose commissions they receive from lenders for arranging the finance, a practice that has been ruled unlawful in many cases.
- Inflated Interest Rates: To increase their own profits, dealers may inflate the interest rate above the level necessary, leaving customers paying more than needed.
If you entered into a PCP agreement and weren’t informed about commissions or were charged an excessive interest rate, you may have been mis-sold.
What Is HP?
Hire Purchase (HP) is a more straightforward financing option, where you make fixed monthly payments towards the total value of the car. Once the full value is paid off, you own the car outright. Unlike PCP, there’s no large balloon payment at the end of the agreement, making it simpler and easier to understand.
Despite its simplicity, HP agreements can still be affected by mis-selling practices.
Common Issues with HP Agreements:
- Undisclosed Commissions: Just like PCP, dealers may have received hidden commissions from the lender without informing the customer.
- Overpriced Interest Rates: Dealers could have inflated the interest rates to maximise their earnings, costing customers more than necessary.
If your HP agreement involved undisclosed commissions or higher-than-expected interest rates, you might be entitled to a refund.
Can You Claim a Refund on PCP or HP Finance?
Many people who financed a vehicle using PCP or HP could be entitled to a refund due to mis-selling. The Financial Conduct Authority (FCA) has revealed that car dealerships often failed to disclose commissions or charged inflated interest rates, causing customers to overpay by an average of £1,100 per agreement.
To determine whether you could be owed money, ask yourself these questions:
- Did you use PCP or HP to finance your vehicle?
- Was your interest rate higher than 4.9% APR (or potentially lower, depending on the circumstances)?
- Were you informed that the dealer would receive a commission for arranging your loan?
- Did you give consent for the lender to pay the dealer a commission?
If you answered yes to any of the above, you may have grounds to make a claim for compensation.
PCP vs HP: Which is More Likely to Have Been Mis-Sold?
Both PCP and HP agreements have been subject to mis-selling, but PCP agreements are often more complex and thus more likely to be affected. With their varied options and hidden terms, it’s easier for dealers to conceal commissions and inflate interest rates in PCP deals.
While HP agreements tend to be more straightforward, dealers can still mis-sell by not disclosing commissions or inflating interest rates.
How to Check If You’re Eligible for a Refund
At Baker Hardman Solicitors, we specialise in helping customers recover money lost due to mis-sold car finance. Our process is simple and efficient:
- Submit Your Claim: Fill out our straightforward online form with basic details about your finance agreement.
- We Investigate: Our experienced team will thoroughly review your agreement to uncover any hidden commissions or inflated interest rates.
- Receive Your Refund: If we confirm mis-selling, we’ll pursue a refund on your behalf, including any compensatory interest.
What Could Your Refund Include?
If you are successful in your claim, your refund could consist of:
- Hidden Commissions: Any commissions paid to the dealer without your consent.
- Excessive Interest: The amount you overpaid due to inflated interest rates.
- Compensatory Interest: An additional 8% per year for the time your money was withheld.
For a typical £10,000 vehicle finance agreement, customers have often been overcharged by at least £1,100—money that’s rightfully theirs.
Start Your Refund Claim Today
Don’t let hidden commissions and inflated interest rates cost you any more. If you’ve entered into a PCP or HP agreement, you may be entitled to a refund.
At Baker Hardman Solicitors, we offer a no-win, no-fee service, making it easy for you to check your eligibility and pursue a claim. Let us handle the legal work while you recover the money that’s rightfully yours.
👉 Start your claim today and take the first step toward getting your car finance refund.
