Everything You Need to Know About Car Finance Claims in 2024

As more and more car buyers cope with unforeseen expenses or ambiguous contracts in 2024, car finance disputes are projected to increase. Being aware of potential red flags and knowing what to do in the event that anything doesn’t feel right are crucial. For additional information regarding auto finance claims, continue reading.

What Are Car Finance Claims?

Consumers file car finance claims when they feel they were not treated fairly during the financing process; these claims frequently involve misrepresentation or unstated expenses. In the event that the financing agreement was not entirely transparent or violated any regulations, the buyer may file a claim to obtain reimbursement or compensation.

Claims are frequently connected to deceptive sales tactics or inadequate advice provided at the time of the agreement. It’s possible that important information concerning their contracts was hidden from them or that they were not made aware of alternate funding choices. For example, many customers of Black Horse have raised concerns over undisclosed commissions and inflated interest rates, leading to a surge in claims

Common Reasons for Car Finance Claims

Car finance claims can arise for several reasons, the most common of which are the following:

  • Mis-selling happens when the buyers were not provided with enough information of the product, or were offered the wrong type of funding arrangement
  • Hidden charges or extra costs were not clearly explained at the start of the agreement
  • High or unfair interest rates which were not fully disclosed or explained
  • Misleading information was provided about final payments, such as in the cases where buyers were unaware of large balloon payments at the end of PCP agreements
  • Incorrect credit assessments that lead to buyers being approved for finance they couldn’t afford
  • Mileage restrictions in PCP agreements were not clearly communicated, and lead to unexpected penalties
  • Undisclosed commission to the dealer

Claims help consumers recover the damages they incurred due to the unfair deals.

How Car Finance Contracts Work

Car finance contracts typically fall into different categories, and each one differs in terms and conditions.

  • A Personal Contract Purchase or PCP agreement lets you pay lower monthly instalments with an option to buy the car at the end for a final balloon payment.
  • A Hire Purchase or HP agreement lets you make regular monthly payments, and you get to own the car once the final payment is made.
  • A Lease (Personal Contract Hire or PCH) agreement allows you to pay for the use of the vehicle in a set period of time, and return it at the end of the lease term.
  • A Conditional Sale agreement is similar to HP where you pay in instalments and own the car once all payments are completed, but the terms might differ slightly.

Each contract type has its pros and cons, and knowing them can help you avoid problems down the road.

 Signs You May Have Been Mis-Sold Car Finance

There are various techniques for mis-selling during a car finance process, and many of these may be subtle. Here are some things to be aware of:

  • Limited finance options were offered, wherein only one type of finance deal was suggested without considering if an alternative might be more suitable
  • The interest rates were not fully explained or were presented in a misleading way that contributed to higher costs
  • Hidden fees and charges were not clearly discussed and resulted to unexpected expenses
  • The expected monthly payments were not accurately presented or have unexpectedly increased
  • The end-of-contract expenses such as the final balloon payment was not discussed
  • The vehicle’s value or resale potential was exaggerated or misrepresented, and ultimately impacting the finance terms
  • Finance was approved even if the lender failed to properly assess affordability based on your financial situation
  • You felt pressured to sign quickly without fully understanding the terms or exploring other options

If any of the situations above applies to you, it’s time to take the initiative to pursue a car finance claim.

How UK Regulations Protect Car Finance Consumers 

Several safeguards are in place to ensure consumers are protected when entering into finance deals.

For one, the Consumer Credit Act and other UK regulations ensure that finance agreements are clear and fair to everyone. More specifically, lenders are obliged to provide all key information upfront so that buyers understand what they’re signing. Misleading or unclear contracts can result in claims if these standards aren’t met.

Moreover, the Financial Conduct Authority (FCA) oversees the industry by ensuring lenders follow rules on transparency and treating customers fairly.

If you feel that your finance agreements were mishandled, these regulations can guide you on your right to seek compensation. Knowing these protections is essential for holding lenders accountable.

The Process of Filing a Car Finance Claim

So you think you have grounds to make a claim against your car finance agreement? Here is how you can move forward.

  • Gather all the relevant documents together, such as the car finance contract, proof of payments, marketing materials received during the finance processing, and even copies of emails and any communication with the lender.
  • Contact your lender or its customer service department to enquire about the issues with your finance agreement and to express your intent to complain. Often, finance claims are resolved in this initial communication.
  • Submit a written complaint to the lender detailing your finance agreement, and include your documents to support your claim.

Once the claim is submitted, the lender or finance provider will review it. If the claim is valid, you may be entitled to a refund or compensation. This process can take some time, but understanding each step will make it less stressful. Staying organised and informed is vital to success.

What to Expect After Filing a Claim

The lender’s assessment of your case can take several weeks or months, depending on how complex your claim is. Take note also that the FCA has extended the response time for lenders addressing claims about mis-sold car finance deals while it continues to investigate the industry.

Also, expect the lender to request additional documents or information to validate your complaint.

If your claim is successful, you could receive a refund, lower payments, or compensation for any financial loss. In some cases, the finance agreement could be cancelled altogether.

On the other hand, if your claim is rejected, you can escalate it to the Financial Ombudsman Service for further review.

Final Words

Car finance can be tricky, but knowing your rights and understanding how claims work can help you avoid common issues. By staying informed and checking your agreements carefully, you can protect yourself from unfair deals.

If you think you’ve been mis-sold or want to know more about your finance options, don’t hesitate to seek expert advice.