How Do I Know If I Was Mis Sold Car Finance?

Mis sold car finance has become a growing concern in the UK, affecting thousands—if not millions—of drivers who used finance agreements such as Personal Contract Purchase (PCP), hire purchase (HP), or other credit products to buy a vehicle. The Financial Conduct Authority (FCA) estimates that commission was paid on 95% of UK car finance agreements, and as many as 40% of these might be mis-sold. Analysts also forecast that the total compensation costs for the industry could reach £16 billion, an indication of just how extensive this issue can be.

If you worry that your finance agreement was not set up correctly or that important details were kept from you, this guide will help you spot warning signs and check that your contract is valid.

Understanding Mis Sold Car Finance

Mis sold car finance arises when a customer enters into a vehicle finance agreement due to misleading details, unclear cost information, or poor advice that does not suit their financial position or requirements. These issues can stem from anything as direct as hidden fees and commissions to more subtle tactics, like pressuring buyers into signing before they have had enough time to assess the offer 

People who were mis-sold car finance can usually expect about £1,1004 in compensation. In some cases, refunds may go up to £10,000.

In recent years, the FCA has intensified its scrutiny of motor finance brokers, dealerships, and lenders—especially concerning commissions and interest rates—but older finance agreements still fall under its spotlight. Because many historical deals predate 28 January 2021 and feature now-banned discretionary commission arrangements, they are often prime candidates for mis sold car finance claims. Reflecting the scale of these concerns, the FCA has extended the deadline for DCA complaints to 4 December 2025, and consumers now have until 29 July 2026—or 15 months after receiving a final response (whichever is later) to escalate unresolved issues to the Financial Ombudsman Service (FOS).

For anyone who suspects they were mis-sold car finance, this extension could be particularly important: it provides extra time to collect evidence and ensure you receive proper advice when submitting your complaint.

Signs of Mis Sold Car Finance

Understanding what to watch for is essential when checking if your car finance was mis sold. Here are key warning signs to consider:

Undisclosed Fees

A common warning sign for a mis sold car finance claims is when costs aren’t spelled out clearly before you sign. Car dealers and brokers often receive commission payments from finance companies, yet many never mention this important fact. 

Unsuitable Terms

A finance agreement must fit your real-world circumstances. That means the dealer or broker should check your income and credit history to ensure the monthly payments are practical. 

Misrepresentation of Key Details

Dealers are expected to provide honest, upfront information about interest rates, total borrowing costs, and how the finance agreement works. Some, however, misrepresent monthly payment figures, incorrectly promise you’ll own the car outright with no extra fees, or inflate the car’s projected future value. 

Pressure to Sign Quickly

If they say you must sign right away for a special deal, they could be stopping you from checking the details. If they only give you the paperwork at the last moment, they might be rushing you so you do not fully understand the agreement.

Why This Matters: The Consequences

Knowing the risks of mis-sold car finance is important to protect yourself. Here are the potential consequences to be aware of:

Overpayments and Unexpected Penalties

Finding extra interest charges or fees you never knew existed can leave you footing a larger bill than you ever planned for. Mileage limits and balloon payments are classic examples—if nobody walked you through those costs, you could be stuck with hefty penalties. 

Damage to Financial Well-Being

When the finance agreement does not fit your needs, it can quickly hurt your finances. Late payments hurt your credit score, making it harder to borrow later. Meanwhile, extra fees and interest can build up before you realise the deal is unaffordable. Any of these oversights or lies could leave you with higher debt than expected for your mis sold car finance costs.

Difficulty Exiting the Contract

Many finance agreements include terms that can make it expensive to end the contract early. If you try to leave the agreement before the end of the term, you may face unexpected costs. If these terms were not clearly explained to you at the time of signing, you might find yourself trapped in a contract with no simple way to exit.

How to Check Your Agreement for Mis-Selling

If any of this sounds familiar, there are a few practical steps you can take to see if your agreement might have been mis-sold:

Review All Paperwork Thoroughly

Collect all your documents - contracts, brochures, emails, letters, and any notes. Compare what's written with what you were told. Look for differences in interest rates, hidden fees or charges, and details about mileage limits or balloon payments that weren't properly explained.

Assess Affordability Checks

Lenders in the UK are obligated to assess a borrower’s financial circumstances accurately. If you suspect no proper credit or affordability checks were performed (e.g., your income was never discussed, or your expenditure was never reviewed in any detail), this could strengthen a claim of mis-selling.

Compare Market Rates and Terms

Sometimes, the easiest way to spot a high interest rate or hidden charges is to check what other deals were available at the time you signed. If your rate is much higher than the average, you might wonder if the dealer pushed it up to earn a larger commission.

Seek Expert Advice If Unsure

If you’re uncertain about your contract’s legitimacy, consult a financial adviser or solicitor who specialises in car finance compensation eligibility. They can spot hidden issues—such as undisclosed fees or inflated interest rates—and guides with the best steps.

Here's What to Do if You Think Your Car Finance Was Mis-sold

If you think you have a mis-sold agreement, proactive steps can help you resolve the issue and possibly recover money.

Gather Your Evidence

You need to gather all your paperwork. This means keeping together your signed contracts, every email or letter from the dealer, any leaflets about finance deals they showed you, and your bank statements from when you took out the finance. Having all these papers ready will make your case stronger if you need to make a proper complaint.

Contact the Lender or Dealer

Your first step is to write to the finance company, explaining clearly what you believe went wrong—for example, if they didn’t tell you about certain fees or didn’t properly check whether you could afford the payments. Let them know how this has affected you, keeping your explanation clear and factual.

Escalate to the Ombudsman or Seek Legal Counsel

If you’re not happy with their response, or if they take too long to reply, you can contact the Financial Ombudsman Service. They’re independent and will review your case fairly. If you’re dealing with a significant sum of money, you may also want to speak to a solicitor who specialises in car finance claims issues.

Additional Resources and Further Support

The Financial Ombudsman Service (FOS) is an independent organisation that helps with disputes between consumers and financial service providers. If you are unhappy with your lender’s response, the FOS may help.

Citizens Advice also provides consumer rights information and can guide you if you suspect your agreement was mishandled or have more questions.

The Financial Conduct Authority (FCA) provides official resources on its website and in press releases to explain your rights and how to make a complaint. For more details, visit gov.uk or fca.org.uk.

The Takeaway

With major changes in the motor lending landscape—driven by the FCA and recent Court of Appeal decisions—consumers can feel more optimistic about their current car finance arrangements, especially if they suspect mis-selling by dealers. However, time may be running out, with the FCA setting a clear deadline for complaints. If you suspect your car finance was mis-sold, act now before it's too late.