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Most customers get stuck in a bad car finance deal. This leads to financial strain and excessive stress. In recent years, car finance agreements have surged up in the UK. People started purchasing cars on PCP and HP finance instead of traditional car loans. This surge in PCP contracts in the automotive industry also led to an increased mis-selling of car deals.
Mis-selling occurs when a customer is overcharged on his finance agreement. It can also happen if the customer is forced to sign a deal using sales tactics. Due to this mis-selling of car deals, claim compensation is in high demand in the UK. Many people have claim mis-sold car finance deals.
Types of PCP Mis-selling:
Mis-selling can happen anytime a customer purchases a luxury or expensive item. For example, if you want to buy a new car but do not have enough money, you may opt for a PCP plan.
PCP (Personal Contract Purchase) is a financial agreement that allows customers to make an initial deposit, followed my low-monthly instalments, and then a final payment. The final payment is commonly known as the balloon payment. It is one of the reasons for mis-selling, as most customers are uninformed about the final options.
In the case of a PCP contract, a customer is presented with three options:
- Lump sum final amount or balloon payment
- Trade off with a new vehicle
- Return the vehicle
If you bought an Audi on a PCP contract and your sales representative did not disclose these three end-of-plan options to you, chances are that you might be mis-sold. You may then start the car finance PCP claim process to get a refund.
This is just an example of a PCP mis-selling. Another type of mis-selling happens when the customer is unaware of the terms and conditions of his contract. He is not sure of the mileage limits, financial terms, or total cost calculations.
Another common example of a mis-sold car finance deal is hidden fees and high interest rates.
Sometimes, car dealers suggest specific financial programs or lenders because of their personal interests. This causes a conflict of interest, which is not a professional approach for selling deals. Sellers do so to increase their commissions. They do not disclose it to the customer, and thus the customer ends up signing a mis-sold car finance deal.
Similarly, lenders may sometimes charge an unusual interest rate that is higher than the market interest rate. This overcharging is another form of mis-selling of PCP deals.
Other than that, customers are sometimes pressured to sign a deal without allowing them time to consider other options. These forced selling tactics also account for mis-selling.
It is essential to note that customers have rights as well. All customers should be familiar with their rights and must have proper knowledge of the PCP contracts so that they can avoid such financial pitfalls. This is somewhat similar to mis-sold PPI car finance.
PPI (Payment Protection Insurance) is also mis-sold to customers without informing them adequately about their payment policies and the contract.
PCP Claim Process:
Otherwise, here are some steps that customers should take to maximise their claim compensation.
- Gather Evidence:
Collecting evidence before claiming for refund is the first and foremost important step. Gather all documentation of the PCP contract, all marketing materials that were presented before signing the deal, and receipts of all payments.
- Identify the Reason:
Pinpoint the specific reason for mis-selling. If you think you have been overcharged on your deal, you can forward this reason for a PCP claim.
- Contact Dealer:
Always discuss your concerns with your lender so that he may rectify the matter directly. If the lender is unavailable or unwilling to resolve the issue, then you may contact the Financial Ombudsman Service (FOS) to put forth your claim process. Otherwise, you can always seek help from a legal practitioner. A solicitor will help you identify the issue, check your eligibility for the claim process, and guide you throughout the process.
Furthermore, customers should know that this process is free of cost. You do not have to pay any amount for the claim process. It is a no-win, no-fee process. This means that you will not have to pay your solicitor any amount until you get your refund. Once you get the amount back, a small percentage will be deducted from your compensation as a service fee. That is it.
The UK has been a victim of many mis-selling cases in recent years. Thousands of people who purchased cars on finance using PCP or HP contracts became a target of mis-selling deals. The government-backed watchdog, the Financial Conduct Authority (FCA), investigated cars sold between 2007 and 2021 and found that almost 99% of them were mis-sold on PCP contracts. This became big news in the UK automotive industry, and now thousands of Britishers are busy claim mis-sold car finance.
