Was I Mis-Sold Car Finance? The Simple Checklist to See If You’re Owed Money

It’s being called the "new PPI," and for good reason. The UK’s car finance scandal is exploding, with analysts predicting that banks could owe drivers up to £20 billion in refunds.

If you bought a car on finance anytime in the last 15 years or so, you’ve likely seen the headlines and wondered: "Am I one of the millions affected?"

The confusing part is that you probably wouldn’t know if you were mis-sold anything. The car worked fine, and the monthly payments seemed manageable at the time.

But beneath the surface of millions of PCP and HP deals, a hidden practice was costing consumers hundreds, sometimes thousands, of pounds extra in interest.

What Exactly Went Wrong?

The core issue revolves around something technical called a Discretionary Commission Arrangement (DCA).

Here is the catch: The higher the interest rate the dealer persuaded you to sign up for, the higher the commission the lender paid the dealer.

It was a massive conflict of interest. The friendly person at the dealership sitting across the desk wasn't trying to find you the best deal; they were financially incentivized to put you on a more expensive deal to boost their own bonus. You paid more interest than necessary, and that extra money went secretly from the bank to the dealer.

The courts and the Financial Conduct Authority (FCA) have cracked down on this, ruling that if this commission was hidden from you, the deal was unfair.

The 3-Point Eligibility Checklist

How do you know if your specific deal was affected? While you can't know for sure without asking your lender, you fit the profile for a potential refund if you meet these three criteria:

1. The Timing (Crucial Update)

Originally, the investigation focused on deals made before January 2021 (when the FCA banned DCAs). However, recent major court rulings in late 2025 have blown the scope wide open.

You should investigate any finance agreement taken out between April 2007 and November 2024.

2. The Type of Finance

The scandal applies to agreements where there was an option to own the car at the end. You are eligible to check if you used:

Personal Contract Purchase (PCP) (The most common type).

Hire Purchase (HP).

Who is excluded? If you used Personal Contract Hire (PCH), which is essentially a long-term rental or lease with no option to buy, you are generally not covered by this specific redress scheme.

3. The "Hidden" Commission

This is the key. You likely have a claim if the dealer received a commission that was linked to the interest rate you paid, AND they did not fully disclose the amount and nature of that kickback to you at the point of sale.

Most people fall into this category because these commissions were almost never disclosed.

Red Flags at the Dealership

Looking back, were there warning signs when you bought the car? While not definitive proof, these scenarios were common in mis-sold deals:

The "Only Option" Pitch: The dealer pushed one specific finance provider very hard and didn’t offer you alternatives or encourage you to shop around for a loan.

Interest Rate Confusion: The interest rate seemed surprisingly high, even though you had a good credit score, and the dealer couldn't really explain why.

Vague Answers: If you asked how they made their money on the finance bit, they gave vague answers like "we get a small fee for paperwork," rather than admitting they earned a percentage of your interest payments.