Personal Contract Purchase (PCP) agreements have helped millions drive new cars with lower monthly payments. However, many consumers mis-sold these agreements without full disclosure of costs and commissions. If you’ve taken a PCP deal in the last ten years, you could be entitled to a refund.
What Is PCP and How Does It Work?
A PCP is a type of car finance where you pay lower monthly instalments and a final balloon payment. Instead of owning the car outright, you have the option to return it or pay the lump sum. These agreements often include interest rates and hidden fees that lenders fail to disclose properly.
Why Are PCP Refunds Being Issued?
Lenders and car dealerships have been found guilty of not disclosing commission structures on PCP deals. The Financial Conduct Authority (FCA) discovered that some dealers inflated interest rates to increase their commission earnings. This practice has led to thousands of people paying more than necessary for their car finance, making it a widespread case of mis-sold car finance.
Who Can Claim a PCP Refund?
If you took out a PCP or Hire Purchase (HP) finance agreement after January 2014, you may be eligible. Your claim is valid if the dealer or lender failed to explain commission arrangements or overcharged you. The FCA has already taken steps to investigate and bring claims against lenders involved in these practices.
How Much Could You Be Owed?
Refunds vary depending on your contract, interest paid, and the lender’s misconduct. Some claims have resulted in refunds ranging from £1,000 to over £10,000. The final amount depends on how much commission was unfairly added to your loan.
What Evidence Do You Need for a Claim?
To start a claim, you’ll need a copy of your PCP or HP agreement and proof of payments. Bank statements and any communication from the lender can help strengthen your case. If you don’t have these, your lender is required by law to provide copies upon request.
How Do You Start a PCP Claim?
You can contact your lender directly and ask if commission was included in your agreement. If they refuse to cooperate, you can escalate your case to the Financial Ombudsman Service (FOS). There are also claim management companies that handle the process for you, though they take a percentage of your refund.
How Long Does a PCP Reclaim Take?
The process can take anywhere from a few weeks to several months, depending on your lender’s response. If your case goes to the FOS, it may take longer due to backlog issues. Being prepared with the right documents can speed up your claim.
Is It Worth Claiming a PCP Refund?
If you suspect you were overcharged or misled, making a claim could return thousands of pounds. Many consumers have already received refunds, with some reducing their remaining finance balances. Even if you’re unsure, checking your agreement costs nothing and could save you money.
Final Thoughts
PCP mis-selling has cost UK consumers millions in unnecessary payments, and many don’t realise they’re owed a refund. If you took out a car finance deal in the last decade, it’s worth investigating your agreement. A simple claim could put significant money back in your pocket.
