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Mis-sold car finance

What are PCP claims?

Our experts explain what PCP claims are and why they could lead to compensation.


27 March 2025

What is PCP car finance?

The PCP car financing method meant car buyers were able to spread their vehicle payments into a monthly basis. This meant buyers had an affordable way to buy a car before having the money to buy one outright.

PCP car finance involved:

  • Paying an initial deposit
  • Paying a fixed monthly payment
  • And at the end, paying a balloon payment.

By paying the final balloon payment, they had ownership of the vehicle. However, an option to return the vehicle before the final payment was also available if they chose not to keep it.

What are PCP claims?

A PCP claim is a legal action for compensation from a finance provider who sold you a car with a monthly payment plan. Within these agreements for monthly repayments, car dealers may have increased the interest charged without those who are buying the car being fully informed.

What does increased interest on a PCP agreement mean?

The Financial Conduct Authority (FCA) recently ran an investigation and found that car dealers were able to boost the interest on a finance agreement which gave them more commission. If you were not told about how much commission they’d be earning, it is likely you were mis-sold car finance.

A higher the interest rate meant more commission went to the broker. This is called a discretionary commission arrangement. Discretionary commission arrangements created an incentive for brokers to increase how much people were charged for their car loan. They were also banned by the Financial Conduct Authority (FCA) in January 2021.

We are here to help

If you bought a car on finance between 2007 and 2021, now is the time to act. At Slater and Gordon, we specialise in financial mis-selling claims and can help you navigate the claims process. Our team of experienced solicitors are continuously keeping an eye on any future developments and will keep you updated as the claim progresses.

For more information visit here or you can contact us at carfinanceclaims@slatergordon.co.uk and our team will do their best to help you.

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