In recent years, thousands of UK drivers have discovered that they were mis sold car finance agreements — particularly under Personal Contract Purchase (PCP) or Hire Purchase (HP) deals.This usually happens when the dealership or lender fails to explain the terms properly, hides key information, or pushes a deal that’s not in your best interest.
If you’ve been a victim of this, you could be entitled to a payout. But how much can you expect, and how do you make a claim? Let’s break it down.
What Counts as Mis-Sold Car Finance?
A car finance deal may be considered “mis-sold” if:
The dealer didn’t explain the interest rate or how it was calculated.
You weren’t told about commission payments that influenced the deal.
The risks of negative equity were not explained.
You were sold add-ons (like GAP insurance) without proper explanation.
The finance terms didn’t match your needs or budget.
Topics of Mis Sold Car Finance
Average Payout for Mis Sold Car Finance in the UK
While each case is unique, industry reports and claim management data suggest that average payouts range between £1,000 and £3,000, depending on:
The size of the loan.
The interest rate.
How long you’ve been making payments.
Any additional products included in the deal.
In some cases, payouts have exceeded £10,000 — particularly when high-interest loans or multiple vehicles were involved.
How to Check If You Were Mis Sold Car Finance?
1. Review Your Agreement – Look for unclear terms, hidden fees, or high interest rates.
2. Check for Commission Disclosure – Dealers must disclose if they earn a commission from the lender.
3. Compare Market Rates – If your rate was significantly higher than average without reason, it could be mis-selling.
4. Consider Your Circumstances – If you were pressured into signing or the deal didn’t suit your financial situation, you may have a case.
Steps to make a Claim:
1. Gather Your Documents
Get a copy of your finance agreement, payment records, and any emails or letters from the dealer or lender.
2. Contact the Lender First
Submit a formal complaint outlining why you believe the finance was mis-sold. They have 8 weeks to respond.
3. Escalate to the Financial Ombudsman Service
If the lender rejects your claim or doesn’t respond, you can take it to the Ombudsman free of charge.
4. Consider Professional Help
Some claim management companies can handle the process for you, but they may take a percentage of your payout.
How Long Does a Claim Take?
A straightforward case may be resolved in 8–12 weeks, but complex cases — especially those going to the Ombudsman — can take several months
Tips to Maximise Your Payout
Provide detailed evidence, including call recordings if you have them.
Keep communication professional and factual.
Don’t settle for the first offer if it seems low — you can negotiate.
Consider legal advice for high-value claims.
(FAQs)
1. What is the average payout for mis-sold car finance?
Most payouts range from £1,000 to £3,000, but high-value cases can exceed £10,000.
2. How do I know if I was mis-sold car finance?
If the lender or dealer failed to explain the terms, hid fees, or sold you an unsuitable product, you may have a claim.
3. Do I need a solicitor to claim?
Yes, generally you must claim within 6 years of the agreement or 3 years from when you discovered the mis-selling.
4. Will making a claim affect my credit score?
No, a mis-selling claim is not the same as defaulting on payments and won’t directly impact your credit rating
5. Is there a time limit for making a claim?
Yes, generally you must claim within 6 years of the agreement or 3 years from when you discovered the mis-selling.
6. Can I claim for more than one car finance deal?
Yes, if multiple agreements were mis-sold, you can claim for each one separately.