Updated: 24 October 2025

Originally Published: 06 January 2025

If you took out PCP or HP between 6 April 2007 and 1 November 2024, it is sensible to check whether the deal was sold fairly. Over the past year, regulators and courts have clarified what counts as mis-sold car finance, who may qualify for a refund, and how complaints will be handled in 2026. This guide shows you the warning signs, explains the latest updates, and gives you a simple plan to move from doubt to action.

What Counts As Mis-Sold Car Finance In 2025

In plain English, mis-sold car finance means the agreement was not explained clearly, key costs or risks were glossed over, or hidden incentives shaped your interest rate without proper disclosure. The Financial Conduct Authority has highlighted three common patterns that will guide mis-sold car finance claims:

Discretionary commission arrangements

The dealership could set or influence your rate within a range and earn more when your rate went up. Most customers were not told that the seller’s commission increased as their cost increased. DCAs were banned for new lending in January 2021 [1], but older agreements are still being reviewed.

High or excessive commissions

Even when the contract said a commission may be paid, the size was often hidden. Very high commissions can distort the sale. The FCA’s yardsticks include levels such as about 35 percent of the total cost of credit or about 10 percent of the amount borrowed.

Restricted lender access

Some showrooms presented only one lender without a genuine comparison. If you were steered only to the in-house option and not told about alternatives, your choice was limited in a way that may be unfair.

Alongside these three categories, classic issues like poor affordability checks, unclear PCP balloon payments, unrealistic mileage limits, and add-ons you did not ask for can also support mis-sold car finance claims.

The 2025 Updates That Matter

Supreme Court clarity, August 2025 [2]

The court confirmed that commission is not automatically unlawful. It also confirmed that secret or excessive commission can make the lender–customer relationship unfair under the Consumer Credit Act. That keeps many claims viable where disclosure was weak or costs were inflated.

FCA complaint pause until 4 December 2025 [3]

Final responses to commission complaints are paused while the regulator finishes a single redress framework for agreements from 2007 to 2024. You can submit your complaint now and secure your place in the queue.

Redress modelling for planning

The FCA’s current modelling points to an average payment of about £700 per eligible agreement and a potential industry total of up to £8.2 billion [4] once the scheme is live. These are planning figures, not guarantees, but they are useful for expectations.

Ten Clear Signs Your Car Finance May Have Been Mis-Sold

Use this list as your first filter. If several points ring true, your agreement is worth a deeper review.

No clear commission disclosure

You were not told that the dealer would receive a commission or how that commission might affect your rate.

Rate felt too high for your profile

Your APR seemed out of line with your credit score, and no one could explain why.

Only one lender offered

The dealership presented a single finance option and did not show a genuine comparison.

Pressure to sign today

You felt pushed to sign there and then, or told the offer would disappear if you thought it over.

PCP balloon not explained

You discovered a large final payment later, or you did not understand that there would be one.

Mileage rules unclear

You were not told about mileage caps or the cost of going over the limit.

Add-ons you did not want

GAP insurance, warranties, or service packs appeared in the figures without your clear consent.

Affordability checks were weak

No real discussion of your regular bills, dependants, or other commitments before approval.

Early financial strain

You began juggling essentials within months or had to refinance to stay afloat.

Vague paperwork

Your documents say a commission may be paid but never explain how big it was, who paid it, or how it affected price.

How To Check Your Agreement In 30 Minutes

Step 1. Gather what you have

• Finance agreement and pre-contract information
• Dealer quote or finance illustration
• Statements or settlement figure
• Emails or texts with the dealer or lender
• Bank statements showing repayments

Missing items are normal. Ask the lender for copies. They must keep records.

Step 2. Sense-check the numbers

Write down the loan amount, APR, monthly payment, total repayable, fees, PCP balloon, mileage allowance, and excess mileage charge. Ask yourself whether these were explained in a way you actually understood at the time.

Step 3. Look for commission clues

Scan for phrases like “a commission may be paid”. Note whether the paperwork explains the amount, who paid it, and if your rate could be adjusted by the dealer. Thin disclosure is a warning sign.

Step 4. Record what you were told

In a few lines, capture what the salesperson said about the rate, how it was set, your choice of lenders, and any add-ons. Fresh notes help later.

What Mis-Sold Car Finance Can Do To Your Credit

Mis-sold finance can damage more than your wallet. If the deal was unaffordable or unclear, late payments, defaults, or even repossession can follow. Marks can linger on your file for up to six years and raise everyday borrowing costs. The good news is that if a complaint is upheld, unfair markers linked to that agreement can be corrected or removed.

Worked Examples To Sense-Check Harm

DCA uplift

You borrow £10,000 over four years. A fair APR might be near 6 percent, but your contract shows close to 10 percent. FCA testing indicates a common DCA model could add roughly £1,100 in extra interest on a £10,000 four-year loan. That uplift points to potential redress if a DCA or thin disclosure sits on your file.

High commission with vague wording

Your agreement hints that a commission may be paid but gives no amount. You later learn the broker’s pay-out was sizeable. If that figure equates to around 10 percent of the loan or 35 percent of the cost of credit, your case may fit the high-commission category.

One-lender showroom

You were shown a single finance option, later discovering cheaper rates were common at the time. Restricted access can be unfair even without a DCA.

How To Start A Complaint The Smart Way

You can do this yourself or get help from a professional. Both routes can work. Choose the one that fits your time and confidence.

Option A. Do It Yourself

Write a short, factual complaint to the lender. Include your name, address, contact details, and agreement number. Keep your explanation clear:

I was not told that my dealer could adjust my interest rate to earn a commission. I believe this increased my costs. Please confirm whether a commission was paid, how my rate was set, and refund any overpaid interest with simple interest. Please also correct any unfair credit entries linked to this agreement.

Ask the lender to confirm receipt. Because of the FCA pause, final responses on commission issues are not due until after 4 December 2025, but your case must be logged now.

Pros

Free, full control, no fee taken from any refund.

Cons

You handle the paperwork, timeline, and follow-ups.

Option B. Use A Professional

If time is tight or your documents are thin, you can appoint a finance claims expert or a claims management company that specialises in car finance claims. A trusted PCP claims company will gather evidence, draft your case, chase the timeline, and keep the file organised. Most work on a no win no fee basis. Typical fees range from 18 to 36 percent including VAT of any successful compensation. Always check FCA authorisation and get the fee structure in writing.

Pros

Less admin for you, helpful on complex files or multiple agreements.

Cons

A success fee applies if you win.

What You Could Recover

Every case turns on its facts, but four elements may show up in successful outcomes:

• Refund of overpaid interest where a DCA or hidden commission inflated your rate.
• Repayment of undisclosed commission the dealer or broker received.
• Simple interest on any refund, often Bank of England base rate plus one percent.
• Credit file corrections for unfair markers linked to the agreement.

The FCA’s current modelling suggests a typical payment around £700 per eligible agreement. Larger loans or multiple agreements can lead to higher sums. Across the market, total redress could reach up to £8.2 billion.

Timing, Deadlines, And What To Expect

• Submit now. Your lender must log the complaint even during the pause.
• 4 December 2025. The pause on final responses ends.
• Early 2026. Final FCA rules are expected.
• 31 July 2026. Proposed deadline for lenders to issue final responses.
• Late 2026. First compensation payments are expected to begin.

There may be a cut-off date later, similar to PPI. Submitting early protects your spot.

Frequently Asked Questions

How do I know if I was mis-sold car finance if I no longer have my documents?

Ask the lender for copies of your agreement and statements. They must keep records. Your bank statements can also show repayments.

Can I complain if the agreement has finished?

Yes. Many mis-sold car finance claims relate to settled loans. Eligibility turns on what happened at the point of sale, not whether the account is still open.

Do I need a solicitor or can I use a PCP claims company?

You can do it yourself, hire a solicitor, or use a PCP claims company or claims management company. Choose a regulated provider with clear fees. A finance claims expert can be useful where paperwork is missing or the case is complex.

Will complaining affect my credit score?

No. A complaint does not lower your score. If you win, unfair markers can be corrected.

What if my paperwork says a commission may be paid?

Vague wording is often not enough for informed consent. The size, payer, and possible effect on your rate matter. Thin disclosure is a key warning sign.

How long will this take?

Because of the pause, most commission complaints will move after December 2025. Final responses are proposed by 31 July 2026, with payments expected later that year.

Short Checklist Before You Hit Send

• I have my agreement or have requested a copy from the lender.
• I have written down APR, term, total repayable, fees, balloon, and mileage rules.
• I have noted any commission wording and who set the rate.
• I have a short, factual complaint that explains what went wrong and what I want.
• I have saved copies of everything I am sending.

Spend half an hour on this list. It will make your complaint much easier to assess.

When Professional Help Makes Sense

Consider a finance claims expert or claims management company if:

• You had several PCP or HP agreements over the years and want them handled together under one complaint.
• You have changed address since taking out the finance, making it harder to locate or verify your agreement.
• You have changed your name (for example, after marriage or divorce) and need help matching your old finance records to your current details.
• The dealer has closed, the lender has changed names, or you’re unsure which company now holds responsibility.
• You have misplaced key documents or never received full paperwork at the time.
• You simply prefer an expert to manage the process, chase the timeline, and challenge a low offer if one is made.

Make sure the firm is FCA-authorised. Confirm the success fee, whether VAT is included, and exactly when fees apply.

Your Next Step

You came here asking how do I know if I was mis-sold car finance. Now you have the markers to check, the documents to find, and two clear routes to start your complaint. Whether you go DIY or ask a professional for help with PCP claims, the important thing is to act. Submitting now gets you into the queue ahead of the 2026 framework and protects your right to be included.

If your agreement was unfair, a successful claim can return money you should never have paid and tidy up any credit entries linked to the deal. That is a practical, measurable step toward a cleaner financial record and a fairer car finance market for everyone.

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References:

1. DCAs were banned for new lending in January 2021 - https://www.fca.org.uk/news/press-releases/fca-ban-motor-finance-discretionary-commission-models
2. Supreme Court clarity, August 2025 - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf
3. FCA complaint pause until 4 December 2025 - https://www.fca.org.uk/news/statements/firms-given-until-december-2025-respond-motor-finance-commission-complaints
4. The FCA’s current modelling points to an average payment of about £700 per eligible agreement and a potential industry total of up to £8.2 billion - https://www.fca.org.uk/news/press-releases/14m-unfair-motor-loans-compensation-proposed-scheme