Drivers could be in line for PPI-style payouts

When it comes to buying a new or used vehicle, many people use a car finance agreement. Indeed, car finance in the UK is a £39 billion industry, according to the Finance & Leasing Association (FLA).*

Yet consumers who purchased finance agreements between 2008 and January 28, 2021 could have been mis-sold, and so be owed substantial compensation. It is estimated that millions of drivers could be affected by mis-selling from brokers who inflated the interest rates paid by customers to earn the maximum commission.

In early 2024, an investigation by the Financial Conduct Authority (FCA) found that some customers “may have been charged too much” on car finance loans before January 2021. The FCA discovered that some lenders allowed brokers “to adjust the interest rates they offered customers for car finance”, who often received higher commission as a result.

If you think this applies to you, it could be worth contacting Finance Detective. The firm can provide a free online claim check and then offer a no win, no fee service, with a maximum 25 per cent plus VAT deduction from any compensation awarded – a lower percentage than the rates charged by other claims companies.

Vehicle finance agreements allow drivers to cover the cost of purchasing a car without having to pay the whole price up front. Typically, you are able to borrow the money needed for the vehicle before having the option to buy it outright when the loan is repaid.