1. The broker often gets a commission, which they keep a secret

1. It has been unveiled that many lenders paid commission to car dealers on car finance agreements and the exact amount of this commission was not disclosed to the consumer. If this has happened, it is what is described as secret commissions. This may violate the CONC requirements and if you believe this happened to you we will investigate the validity of your claim.

2. The Difference in Interest Rates the dealer may select.

Many Car Dealers when arranging finance for PCP or HP use what is known as a DIC model. This is where they can select the commission to be charged on the finance deal on a range of interest rates. The higher the interest rate that you pay the more commission the card Dealer may get from the finance provider.

3. Contracts are rarely adequately explained.

Many consumers advise that the true nature of the finance agreement has not been explained properly or in full detail. Many consumers did not fully the understand the fact that they did not own the vehicle, the impact of the Balloon payment at the end of the term, and the termination charges for example in relation to excess mileage wear and tear etc.

4. Responsible Lending.

Many consumers took out finance deals that they could not afford. Also, many car dealers did not do detailed and comprehensive affordability checks just a basic credit check. If a detailed affordability check was not carried out and the car was not affordable at the time you took out the vehicle you may have a claim for irresponsible lending.

What exactly is PCP car finance and how was it mis sold?

PCP stands for Personal Contract Purchase, it is a financial plan to help you obtain a motor for an average of 2-4 years by paying a monthly fee.

The finance plan is set up in three forms of payment.

1. You will make a deposit for the vehicle, this could be 10% of the vehicle’s retail price.
2. Once you have paid a deposit the rest of the agreement is made up of monthly installments.
3. After 2-4 years when the vehicle agreement comes to an end you will now have a decision to make, either pay a large balloon payment that can be up to 50% of the retail price of the vehicle or you simply hand back the vehicle and have nothing to pay, as long as the vehicle is in good condition and you did not exceed your mileage allowance.

See the example below to understand how it works. Imagine you sign up for a PCP over three years.

The vehicle costs £20,000 the finance company calculates that the vehicle will be worth at least £8,000 after three years. This is how it would look…

• You pay a deposit for example £2,000 the rest will be obtained via a loan for the sum of £18,000.
• The outstanding balance is now £18,000,  however it has been agreed that the vehicle will only be worth £8,000 at the end. You only repay £10,000 (plus the interest on the entire £18,000) over the three year period.
• At the end of the agreement, you either pay the final £8,000 to keep the vehicle or have the option to hand the vehicle back.

Importantly, even if you return the car, you will still have paid interest for the full loan amount (£18,000) over the three year period.

Call and speak to one of the team today to see how we can help you make a claim for Mis-Sold Car Finance today!