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PCP Car Finance Claims
Have you bought a new or used car using finance in the last ten years? If you have, that finance agreement may have been mis-sold to you, and you may be able to claim hundreds, if not thousands of pounds in compensation.
Contact Evans Hughes today, and we'll check your car finance agreement and tell you how much you may be able to claim in compensation.
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So what types of Car Finance breaches can you claim for?
We can help you with the 8 main points of Motor Finance Mis Selling
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The broker often gets a commission, which they keep a secret
It has been unveiled that lenders tend to conceal the existence of commission offered to their brokers. A mystery shopper exercise carried out in 2018 reviewed the processes followed by 122 retailers in their provision of Motor Finance.
Of those 122 retailers only 11 disclosed to the customer that commission may be received by the broker for arranging the finance. This violates CONC requirements as it creates an unfair relationship between customer and lender.
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The Difference in Charge commissions
It has been found that lenders often incentivise a broker to charge a higher interest by compensating them with a commission proportional to the interest the sell. The estimated cost of this behaviour for the customers is £300m annually.
An FCA consultation entitled : ‘Motor Finance discretionary commission models and consumer credit commission disclosure,’ found that Difference in Charge models are the most damaging to the customer which unnervingly consist of 95% of the 1000 agreements the FCA looked into.
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Contracts are rarely adequately explained
The mystery shopper exercise which was carried out by the FCA also wanted to investigate whether or not lenders fully disclosed all the necessary information regarding the Motor Finance agreements to be made.
The shoppers found that the concept of ownership of a car under PCP was frequently brushed over or poorly explained. 69% of the mystery shoppers were not made aware by the broker that they would not fully own the vehicle until they had payed the final ‘balloon payment.’ The FCA concluded that they were ‘not satisfied that firms are complying with regulatory requirements.’
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Customers are misled with numbers
Lenders are required by law to give an APR of a Motor Finance Agreement so the customer may compare products, however, they are then free to give an equivalent representation of the APR. A prevalent example comes in the form of flat rate interest.
Flat rate interest is applied to the starting balance for the entire duration of the loan no matter how much of it is paid off. This means that as a percentage value, flat rate interest is very low compared to other types of interest while still providing the same returns. In failing to clarify to the customer this key detail of their interest rates, lenders are in breach of UK consumer credit law.
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Unreasonably high interest rates
The Difference in Charge agreements showed a direct correlation between broker earnings and higher customer interest rates. Only now are regulators clamping down on lenders to review their systems, revealing the fact that brokers have been earning higher commissions straight from the higher interest rates.
The FCA warned that thousands of customers could be paying 50% more interest than necessary. This is also due to the consumers being made to take out more money than actually necessary and then have interest charged upon that higher number.
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Unfairly charged fines and fees
There are many different types of charges you can received through a mis sold PCP. One of the charges is often from the ‘Mileage Limit’ which if exceeded, the fee could be very steep. People are often not made aware of the exact details of the mileage limit so it becomes scarily easily to go over the limit and receive a charge.
The other fee to look out for is the ‘Wear and Tear’ because although you may believe you have kept the car in good condition, the dealers may count smaller things you were unaware of as a part of this charge and again the fees won’t be insignificant.
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Ineffective credit checks
There is concern over some dealers who are trying to get customers approved by second-string lenders if the customer has been declined by their primary lender.
This may result in much higher rates as the finance company they may get approval from will probably specialise in sub-prime customers as they were not able to get a check from the main lenders.
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The brokers haven’t been regulated
It appears that an alarming number of PCP companies have seemingly been acting without regulation. They have been manipulating PCP’s to their own benefit at the cost of the consumer.
Many brokers have been operating without the oversight of FCA regulators which is not only irresponsible but also illegal, this unfairly places the consumer in a very precarious position.
What is a PCP Car Finance?
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.You will make a deposit for the vehicle, this could be 10% of the vehicle’s retail price.
Once you have paid a deposit the rest of the agreement is made up of monthly installments.
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 exceeded over your mileage allowance .
However, unlike a normal personal loan, you won’t be paying off the full value of the car and you won’t necessarily own it at the end of the deal (unless you choose to pay the final balloon payment).
PCP is one of the more complex financial products available to help you buy a car, but it can be broken down into three main parts: the deposit, the amount you borrow and the balloon payment.
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Get In Touch With Us
Contact us and tell our experts what has happened. The more information you can provide us the better we can assess the prospect of your claim.
Relax, Let Our Experts do the work
Our experts either in house or on our select panel of Solicitors will do the heavy lifting when it comes to legal work.
Compensation
At the conclusion of your claim we aim to get you the best compensation offer possible. If we feel the offer is too low then we will support you through the court process.
Our bulletproof claim process is a win for our clients.
At Evans Hughes we help you to claim compensation. We also steer you through the aftermath of a PCP Car Finance Claim– minimising the impact on you as much as possible.
Claim NowHow customers are finding the hidden comissions.
“Evans Hughes conducted a free assessment of my PCP contract with my main dealership. I did not know, nor did they tell me that the commission paid on my new car was £4800!”
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Simon C
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We are ready to help you. Get in touch today
We will give you an honest assessment of your circumstances and advise if a claim can be made.
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