Mis-sold car finance claims are surging, with legal experts predicting a sharp rise in litigation. New evidence suggests widespread unfair practices by lenders, particularly in discretionary commission models. With growing awareness, consumers are now challenging car finance deals that left them paying excessive interest rates.
Why Are Mis-Sold Car Finance Cases Rising?
Legal professionals argue that lenders and brokers failed to disclose crucial financial details. Many car buyers unknowingly paid inflated interest due to hidden commissions, which were not made clear at the point of sale. The Financial Conduct Authority (FCA) has been investigating these issues, prompting more claims against lenders.
A study by the FCA found that some car dealers manipulated interest rates to maximise their commissions. This practice, known as discretionary commission arrangements, allowed lenders to incentivise dealers at the expense of consumers. The regulator estimates that affected customers overpaid by £300 to £1,100 per finance agreement.
Who Can Make a Mis-Sold Car Finance Claim?
Consumers who took out car finance agreements, such as Personal Contract Purchases (PCP) or Hire Purchase (HP), may be eligible to claim. If they were not informed about how commissions influenced their interest rates, they could have a strong case. This includes agreements with major lenders, such as Close Brothers finance claims, which are now being investigated for potential unfair practices.
Key signs of a mis-sold car finance deal include:
- The dealer did not explain how the interest rate was set.
- The finance agreement was pushed without presenting alternative options.
- Hidden fees or unexplained charges increased the total repayment amount.
What Compensation Can Affected Consumers Expect?
Those who successfully claim could receive a refund on overpaid interest and charges. Some cases result in thousands of pounds in compensation, depending on the size of the loan. Recent settlements suggest that lenders are increasingly willing to resolve claims rather than face costly legal battles.
Experts recommend checking old finance agreements and reviewing all communication from the lender. If a deal seems unfair, seeking legal advice or using a financial claims service may help speed up the claims process.
What’s Next for Mis-Sold Car Finance Litigation?
The FCA is expected to introduce stricter regulations to prevent further mis-selling. Legal firms anticipate a flood of claims, with consumer awareness driving more cases to court. Some lenders are already setting aside millions to compensate affected customers, following similar patterns seen in PPI mis-selling scandals.
If you suspect you were mis-sold a car finance deal, acting sooner rather than later is wise. As regulations tighten, the claims process may become more streamlined, increasing the chances of securing compensation.
