Tens of thousands of car owners in the UK could be owed compensation after being mis-sold personal contract purchase (PCP) finance. A recent Financial Conduct Authority (FCA) investigation discovered widespread evidence of mis-selling on all types of vehicle financing options.
But what exactly is PCP finance?
PCP is a flexible financing option that can provide lower monthly payments than a personal loan or hire purchase (HP) car finance agreement.
Over the last ten years, many people have been sold car finance agreements, but have been completely unaware of the hidden fees involved. This occurs where the sales team has been pushing a more expensive PCP plan with the intention of receiving a ‘hidden commission’. Lenders incentivised brokers and car dealers to charge higher interest or borrow more by offering more commission if they did.
What about balloon payments?
At the end of a finance agreement, the buyer has the option to pay a ‘balloon payment’ which is the outstanding amount left to pay, in order to own the vehicle.
The problem is that buyers can end up paying much more for the vehicle than they realised, and dealers often do not make this clear when marketing PCP loans.
Some buyers have also borrowed more money than was necessary and, therefore, paid more interest than they needed to.
Dealers are, unfortunately, incentivised to arrange these agreements at higher interest rates, in order to receive higher commission themselves.
Does this apply to me?
Ask yourself – were you provided with all the relevant information at the point of purchase?
If any of the below mis-selling points relate to your agreement, then you could be eligible for financial compensation worth thousands of pounds.
- Were you made aware that by taking out a PCP agreement, you could end up paying considerably more than under a hire purchase agreement?
- Was it made clear that there was a balloon payment to be made and that if you failed to pay the balloon payment, you would risk losing the vehicle?
- Was a full and detailed affordability assessment carried out?
- Did the organisation you were purchasing the vehicle from disclose that they would be receiving commission from recommending the vehicle finance?
- Did you fully understand all the paperwork and were you provided with clear and transparent information?
If you answered ‘no’ to any of these statements, you could have reasonable grounds for pursuing a mis-sold PCP claim.
We help our clients understand what their positioning is, what they stand to win, and then we help them to get the best result possible.
Interested in chatting to one of our experts? Don’t hesitate to find out if you could be owed money. Call 01615 180980 or email [email protected].