The Personal Contract Purchase (PCP) system stands as the dominant means of automobile financing throughout the United Kingdom. PCP allows customers to pay monthly installments with the option of keeping their car or returning it when the contract concludes. PCP financing has gained widespread use despite its problematic history which includes several instances of mis-selling through inflated rates and hidden commissions. PCP car finance claims have become prominent again in financial redress discussions due to consumers becoming more informed and financial watchdogs implementing stricter oversight.

The common belief that complaint submission periods have ended does not match the actual situation. Consumers seeking justice in a market recovering from hidden lending practices and discretionary commissions continue to rely on PCP claims as their essential tool.

The Current Financial Climate and Consumer Vulnerability

With inflationary pressures and the cost of living continuing to rise, households across the UK are reassessing past financial decisions, including how they financed their vehicles. What once seemed like a reasonable monthly payment may now be re-evaluated in light of tighter budgets and increasing awareness of fair lending practices.

Consumers are realising that small overcharges or vague contract terms can amount to hundreds or even thousands of pounds over the life of a PCP agreement. Many people now search for car finance claims check tools and online resources following their recent interest in uncovering potential mis-selling of car finance from past years.

At a time when every pound matters, identifying mis-sold vehicle finance agreements is no longer just about principle — it’s about financial survival.

Why PCP Claims Still Matter

The high car finance PCP claim volumes persist even after recent complaints because there are valid reasons for their numbers. The Financial Conduct Authority (FCA) continues its investigation into motor finance sector practices with a focus on discretionary commissions, which enabled dealers to manipulate interest rates for profit, but this practice is currently banned.

The majority of customers remained uninformed about these commissions, which led to higher borrowing expenses they unknowingly paid. Buyers often did not receive comprehensive information about balloon payments which mandate large final sums to secure ownership of the car or about mileage restrictions that impose significant fees when crossed.

These undisclosed terms can lead to long-term financial consequences if they remain unresolved. The failure to fully understand contract terms can lead consumers to negative equity situations and unexpected early termination fees. PCP car finance claims enable consumers who have been wronged to receive appropriate compensation and correct financial wrongs.

Common Grounds for Filing a PCP Claim Today

PCP mis-selling has been problematic for many years yet the reasons to file a claim continue to hold their relevance in the present day. Common examples include:

Discretionary commissions: 

Discretionary commissions were a practice where dealers could increase the interest rates on your car finance agreement in exchange for a larger commission. Dealership arrangements kept hidden from consumers resulted in unnecessarily higher finance charges. The dealership or broker had the discretion to change your rates, which likely resulted in you being charged more than necessary, leading to a mis-sold agreement. Disclosure of these commissions must be verified because nondisclosure provides legitimate grounds for filing a claim.

Inadequate explanation of balloon payments: 

The balloon payment is the final lump sum payment needed to fully own the vehicle after completing a PCP contract. The consumers lacked proper information about how the payment would impact the total car price and received details about the balloon payment only when the contract ended. The unclear terms resulted in financial stress and confusion for consumers when they reached the payment deadline at the end of their agreement. The basis for a mis-selling claim can arise if consumers were not given a clear explanation at the point of signing the agreement.

Unclear mileage limits: 

The majority of PCP agreements set annual mileage limits and drivers who surpass these limits face significant fees after their contract ends. Consumers often remained uninformed about the fee calculation method and the complete range of penalties for surpassing the mileage threshold. Lack of detailed information causes the agreement to appear unfair while generating unexpected financial duties after contract termination. Hidden terms or failure to properly explain them allows for the filing of a complaint.

Lack of affordability checks: 

One of the key requirements for a responsible lender is that they conduct a thorough affordability check before offering a loan. When selling PCP agreements, lenders often did not check if consumers could handle their monthly payments throughout the duration of the contract. The failure of a lender to properly evaluate your financial status, followed by offering you an unaffordable agreement, may be considered mis-selling. At the time you agreed to the terms, you must check whether a cost-availability evaluation occurred.

Each of these issues highlights the importance of transparency and informed consent — both of which are cornerstones of fair lending. When these are absent, consumers have a right to question the legitimacy of the agreement and seek a vehicle finance refund where appropriate.

How the Landscape Has Shifted Since PPI

Payment Protection Insurance (PPI) mis-selling became the UK's biggest financial scandal. Consumers remained unaware that they had been billed for insurance products they neither required nor understood and did not agree to purchase. Following extensive public awareness efforts and regulatory interventions, consumers received refunds totaling more than £38 billion.

In many ways, PCP finance is following a similar trajectory. While not as widely publicised as PPI yet, the scale of mis-sold car finance in the UK is becoming harder to ignore. Several financial experts, along with consumer advocates, consider PCP to be the upcoming financial claim wave driven by growing consumer awareness about its warning signs.

What makes PCP different is the complexity of the product. Unlike PPI, which was a single add-on, PCP agreements involve multiple layers — including interest rates, fees, mileage caps, and final payments. The intricate nature of derivative products raises challenges for regulatory monitoring of mis-selling because offenses can remain difficult to uncover even when easily concealed in complex structures.

What Consumers Should Do Now

If you financed a car using PCP in the last ten years, now is the time to review your agreement. No way of securing a mortgage deal through a dealer, broker, or directly with a lender will change the obligations for transparency nor fairness standards.

Here’s what you can do:

Review your original paperwork for any mention of commission, interest rates, or balloon payments. 

The first step is to find your finance agreement together with all related terms and conditions, payment schedules and any correspondence like emails or brochures received when you signed the agreement. Examine the finance agreement to identify if the interest rate was explicitly detailed along with any signs of commissions paid to the dealer or broker. Confirm proper disclosure of the balloon payment and verify its consistency with the verbal agreement you received. These documents provide essential evidence to support your legal case.

Use a trusted car finance claims check tool to assess whether your agreement shows signs of mis-selling. 

You can use online tools to swiftly determine whether your agreement contains warning signs such as excessive interest rates or unclear fees and missing affordability checks. You can obtain these free checks to help determine if you were mis-sold initially. The analysis process starts by acquiring basic vehicle information such as make and model together with details about the finance term and total payment amount. The findings will guide your decision about whether additional steps need to be taken.

Seek professional guidance from claims specialists who can help evaluate your eligibility. 

With customised advice from professional claims advisers, you can handle confusing agreement details and next steps. Seasoned advisers possess the skills to communicate effectively with lenders while knowing which documents will strengthen a claim. Most advisers work with a no-win, no-fee model which allows you to assess your options without having to pay upfront fees. Their expertise also helps you avoid mistakes that could delay or jeopardise your claim.

File a complaint directly with your lender, or escalate it to the Financial Ombudsman Service if necessary. 

Once you have your documentation and any supporting evidence, submit a formal complaint to the lender who issued your PCP finance agreement. You can also choose to work with a Claims Management Company (CMC) or claims specialist to help manage the process. Your complaint should detail the reasons you think the agreement was mis-sold and provide supporting evidence. You may escalate your complaint to the Financial Ombudsman Service (FOS) if the lender fails to resolve the issue within eight weeks or dismisses your complaint without just cause. The Financial Ombudsman Service examines financial disagreements between users to issue decisions that defend consumer rights through an unbiased assessment process.

However, do note that the FCA has paused the lenders' reply period to complainants while pending Supreme Court's decision. The FCA has extended the eight-week deadline for lenders to respond to motor finance complaints involving discretionary commission arrangements (DCAs) until after December 4, 2025. The extension seeks to protect consumers and businesses against undesirable results arising from inconsistent approaches by the FCA as they conduct their review into commission arrangements until the Supreme Court decides on related cases.

Even if you’ve completed your contract or no longer own the car, you may still be eligible for compensation. Many consumers wrongly assume that once the contract ends, they have no recourse — but that’s simply not true under UK law.

Conclusion

PCP car finance has helped millions of people afford vehicles that might otherwise have been out of reach. The issues related to mis-sold car finance or bad product sales, concealed costs, and optional commission payments in car financing produced an unfavourable truth about many initially deceptive deals.

Now more than ever, PCP car finance claims remain a powerful way for consumers to assert their rights and recover money they may never have realised was wrongly charged. With the cost of living still high and regulatory scrutiny increasing, reviewing your old agreements could be a smart financial move.

The level of PCP mis-selling activities has already approached the breadth of the notorious PPI compensation scandal that affected UK banking institutions. As the FCA continues its review and with a Supreme Court decision pending, lenders are now preparing for potentially significant financial exposure — with billions of pounds being earmarked for possible PCP refund claims. Consumers are strongly encouraged to explore their options while this window for redress remains open.

If you're unsure whether your car finance was fair and transparent, now is the time to take action. Use a car finance claims check or speak to a specialist to uncover whether you're owed a vehicle finance refund — it’s your right to ask the questions, and your opportunity to be compensated if you were misled.