Personal Contract Purchase (PCP) is a form of credit which helps vehicle buyers finance their purchase. A PCP provider provides a loan, which the vehicle buyer pays off through monthly payments. At the end of the term, the borrower can make a final ‘balloon’ payment, making their car theirs.
The average victim of mis-sold PCP was overcharged by £3,000.
Over 560,000 consumers were mis-sold PCP, and could be paid up to £10,000 in compensation!
See if you could qualify for compensation in less than ten minutes!
What Is PCP Finance?
What is Mis-Sold PCP Finance Claims?
After an FCA investigation, it was found that PCP providers mis-sold their credit in various ways. The most common way was through charging sky-high interest rates, allowing providers to take home hefty commissions. This increased the cost of borrowing for the borrower, while maximising profits for the lender.
Did You Know?
The average PCP claim results in the borrower receiving a payout of £3,000, 6-8 weeks after submitting their claim. Victims of mis-selling can request compensation for up to 10 years after it occurs.
How Could I Have Been Mis-Sold PCP Finance?
- Fees, total cost and interest rates were not clearly explained to you.
- Your seller offered you sub-par rates, less competitive than you should have been offered.
- Your seller failed to explain how vehicle ownership operates during your PCP agreement.
- You were not told about the mileage limit tied to your contract.
- You were sold a loan when your seller knew it was unaffordable for you.
- Your lender neglected to tell you about alternative financial products.
- You were pushed to buy add-on insurance, which you did not need.
- You were not told that if you damage the vehicle, you will incur high charges.
How Do I Make a PCP Finance Claim?
If you think you have been mis-sold PCP, it’s time to make a claim.
First things first, put together any evidence you have. This could be email correspondence with your seller, a letter which shows them pushing you to buy insurance, or anything else you deem useful.
But don’t worry if you don’t have any evidence to hand! When it comes to PCP claims, most claimants simply explain what happened, the key facts, dates, numbers or anything else they can recall.
The Financial Ombudsman Service can investigate your situation. However, they will only launch their investigation once you have been through the complaints procedure with your lender and have written proof that the lender has decided not to help with your issue.
The average PCP finance compensation is around £3,000 so far, but some motorists have been able to claim as much as £10,000. The amount you receive is based on a reimbursement of the finance that you have paid so far and 8% compensation on top.
These factors that affect the size of your claim include:
- Make and model of the vehicle
- Number of years the PCP deal has been active
- Amount of interest paid so far
- Age and value of the vehicle (must be less than 10 years)
- The interest rate you have been charge / mis-sold
Tell Me More About The Mis-sold PCP Finance Claims Scandal
After spotting misconduct in the PCP industry, the FCA launched a two year investigation. From this, they learnt that over 560,000 borrowers had been mis-sold PCP. Together, these borrowers had overpaid around £300 million in interest. A key issue here was that sellers failed to explain that these tall rates translated to commissions for themselves.
Mis-selling is not constrained to inflated interest rates. The FCA found that only 28% of sellers provided borrowers with a total sum of what their PCP would cost them. Almost 70% of sellers failed to explain who bears ownership of a car purchased with PCP.
Other sellers pushed consumers to buy add-on insurance, which is pricey and non-essential.
Mis-Sold PCP Claims FAQs
- Why Do Consumers Use PCP?
- Can I Get PCP Compensation on a Used Car?
- Interest On My PCP Is High. Have I Been Mis-Sold My Loan?
- How Long Does It Take To Receive My Compensation?
- What Is A Balloon Payment?
- How Much Could I Receive In Compensation?
- What If I Don't Make The Balloon Payment?
- Can I Claim Even if I am in Arrears?
- Can I Apply if My Vehicle is Second Hand?
PCP is popular as it allows consumers to buy the car of their dreams, even though they don’t have the cash to buy it outright.
It means that they can buy their car, and pay it off. It’s the vehicle equivalent of Buy Now, Pay Later. That’s why 90% of car purchases in March 2022 were made with the help of PCP.
Yes, PCP claims can be made against first-hand or second-hand vehicles, assuming that it has been within the last 10 years and the vehicle was purchased using PCP.
No, not necessarily. When mis-selling comes into play is when sellers charge you higher interest than they should, take your interest payments as commission (essentially profits) for themselves, and fail to tell you that’s where your interest payments are going.
If your claim is approved, you will receive your compensation around 6-8 weeks after submitting your application.
The balloon payment essentially makes your car yours. During your PCP contract, you do not own your car. After you complete your repayments, you can make a balloon payment. At that point, your car is in your name.
The average successful claimant reaps about £3,000 in compensation. However, you could receive up to £10,000, depending upon your particular situation.
Then you give your car back. If you do not make your balloon payment, which usually equates to the value of two months’ worth of repayments, then you return the car to your lender.
If you do make the payment, then the car is yours!
Yes, especially if you are in arrears, you can check your eligibility for compensation – since you may have been overcharged and with the help of a claim, you could receive money back. Being overdue or in arrears will not impact your application for a claim.
Yes, absolutely, you can be eligible as long as you bought the vehicle on PCP finance within the last 10 years and it does not matter if it is second hand, third hand or used.