Did you purchase a car using PCP (Personal Contract Purchase) finance between 2007 and 2020? You might be entitled to compensation. Many UK motorists have submitted claims mis-sold car finance agreements, with potential compensation amounts varying based on individual circumstances.
How Can I Make a PCP Car Finance Claim?
If your car dealer failed to disclose commission arrangements or provided misleading information about your finance agreement, you may be eligible for compensation. The process involves checking your eligibility, gathering evidence, and submitting a properly structured claim either yourself or with professional assistance.
Understanding PCP Claims: What You Need to Know
A PCP claim is a request for compensation from your finance provider when your PCP agreement was potentially mis-sold.
The Financial Conduct Authority (FCA) has identified issues in the car finance industry affecting consumers. Successful claims may result in refunds of overpaid interest and hidden commissions, though outcomes vary by case.
Checking Your Eligibility: Do You Qualify?
Before starting the claims process, you need to determine if you might be eligible for compensation. If your car finance agreements were mis-sold based on one of the following, you might be entitled to compensation:
- DCA (Discretionary Commission Arrangements): These allowed brokers or dealers to adjust the interest rate within a set range from the lender. The higher the rate they chose, the more commission they earned. Customers were usually unaware of this setup.
- UDC (Undisclosed Commission Arrangements): This refers to any commission paid to a broker or dealer—whether flexible or fixed—that wasn’t clearly explained to the customer.
An eligibility assessment can help determine if you have potential grounds for a claim. Individual circumstances vary, and not all cases will result in compensation.
Professional Help vs. DIY Approach: Which Might Be Better?
While some car owners handle their PCP finance claims independently.
The Expert Approach
Specialist services offer several potential advantages:
- Specialized Expertise: Teams with experience in car finance claims
- Comprehensive Service: They handle paperwork, communications, and negotiations
- Time-Efficient: They may save you hours of research, documentation, and follow-ups
The DIY Approach
If you prefer to pursue your PCP refund independently, be prepared to:
- Gather all relevant documentation including your agreement, payment records, and communications
- Write a detailed formal complaint letter explaining the technical reasons for potential mis-selling
- Submit your complaint to the finance provider and navigate their processes
- Wait up to 8 weeks The response time of 8 weeks is currently paused by the FCA and the companies do not have to respond until 4th December 2025 (normally the company will need to provide a final response within 8 weeks).
- Potentially escalate to the Financial Ombudsman Service if unsatisfied with the response
While possible, many find this process time-consuming and complex. Success rates can vary depending on the quality of evidence and presentation.
How Much Compensation Could You Receive?
Understanding your potential compensation can help you decide whether pursuing a claim might be worthwhile.
Compensation amounts vary significantly based on individual circumstances, loan values, and interest rates applied. Some claims result in potential substantial refunds, while others may receive smaller amounts or no compensation.
Common Concerns About Making a PCP Claim
Will making a PCP claim affect my credit score?
No, making a PCP claim should not negatively impact your credit score. The claim process is separate from credit reporting systems, and exercising your consumer rights cannot legally be used against you in credit assessments.
Can I make a claim if I’ve already paid off my finance?
Yes, you may still be able to make a claim even if you’ve completely paid off your finance agreement, provided you’re within the time limits. Both current and settled agreements may be eligible for review.
What if my finance company rejects my claim?
If your finance provider rejects your claim or offers an unsatisfactory settlement, you may be able to escalate your case to the Financial Ombudsman Service. This process can be handled independently or with professional assistance.
How much does it cost to use a claims service?
Most specialist services operate on a fee structure where you only pay if they successfully secure compensation for you. Fee arrangements are capped, but it’s important to understand the terms before proceeding.
Why Consider Professional Help for Your Claim
Making a PCP claim requires understanding complex financial regulations and evidence requirements. Professional services may offer advantages such as:
- Industry Knowledge: Understanding of what evidence carries weight with finance companies
- Streamlined Process: Handling the entire claims process with minimal input needed from you
- Experience: Familiarity with the claims process and potential challenges
- Risk Management: Fee structures that align with successful outcomes
Take the Next Step
If you financed a car between 2007 and 2020, you might be entitled to compensation. Individual circumstances vary, and not all cases will result in payouts. Consider checking your eligibility to understand your potential options.
This content has been developed in collaboration with My Car Loan Claims trading as Alawco Limited, SRA authorised and regulated, with their supervision ensuring factual accuracy..
