PCP Claims FAQs: Your Most Common Questions Answered

The surge in mis-sold PCP claims reflects a growing concern for consumers and the car financing sector. PCP claims arise when individuals who have had PCP agreements learn that they have been mis-sold, caused by a lack of transparency. This rising number of claims reflects consumer awareness and highlights the prevalence of unfair practices like this.  

If you think PCP claims are confusing, you’re not alone. PCP agreements are complex, and making a claim is even more challenging. It’s natural not to know the ins and outs or the finer details of financial agreements like these. However, if you're planning to file a PCP finance claim or are considering doing so, you’ve likely encountered several PCP finance claim questions or challenges along the way.

FAQ’s

Is PCP claim for new cars only?

A PCP claim is not limited to new cars or just cars alone. You can also make a PCP claim for the following:

• Used vehicles purchased through PCP financing
• Repossessed vehicles paid through PCP
• Vans, Trucks, Motorcycles

Can I make a PCP claim if the agreement is already finished?

Yes. You can still make a PCP claim even if the vehicle has been fully paid off, or on agreements that are still ongoing. Over time, the timeline for filing PCP complaints has evolved, particularly regarding whether your PCP claim includes DCA. It’s important to review the most recent guidelines to ensure compliance with any updates or changes in the process.

How many vehicles can I include in a single PCP Claim?

You can include multiple vehicles in a single PCP claim as long as all vehicles have been completed or purchased through PCP, and is under your account. 

What's better, PCP or lease?

It depends on you as both options can be cost-effective if it suits you. PCP are costly, but best offered if you’re eyeing for flexibility, as agreements like this entail multiple options at the end of each term. In a PCP agreement, you can either trade, buy or return the car after the term. On the other hand, leasing is cheaper as you pay an interest-free monthly fee on a brand-new car over a set term, and return the car once the contract is done. With leasing, you don’t have the option to own the car, unlike with PCP.

Are PCP claims legit in the UK?

Yes. Many UK residents were able to claim their compensation from a PCP Claim. 

What are PCP claims management companies?

Personal Contract Purchase (PCP) claims management companies are companies that help people with their complaints against car finance companies. This is because of commission hidden in the claims and poor practices that result in the consumer losing money.

How do PCP claims management companies work?

PCP Claims management companies are the professional intermediaries in between the claimants and the car finance companies. They gather evidence and decide if the claims are valid and should be filed, before taking action and pursuing them. PCP claims management company makes PCP claim easier for claimants who may not have the time to do it on their own. 

What is the 'No Win, No Fee' model and how does it work?

The 'No Win, No Fee' model is a term used to describe that the customer does not have to pay any upfront fee to claims management company for them to work on their PCP claim. Once successful, then only will the claims management company take a percentage of the compensation awarded. This is particularly beneficial for those who are willing to take legal action but are wary of incurring costs.

Can I submit a PCP complaint without a claims management company?

Yes. Not everyone hires a claim management company because it is discretionary. A PCP claim can be made to the car finance company, which is your dealer and the Financial Ombudsman Service (FOS). But if you do not have the knowledge, and confused on how to take action,then a claims management company is an ideal choice to save time and resources while ensuring the claim gets done. 

How much PCP refund can I expect?

On average, a PCP claim can go from £1,600 to £10,000, depending on the different factors such as the agreement timeline, and the total amount. You can also use a car finance claim calculator to get an estimate of your possible compensation. 

What is a PCP claim?

A PCP claim is a dispute that stems from a personal contract purchase (PCP) agreement, to which the ground is that it was mis-sold. PCP remains a popular choice for financing vehicles, as it appears a good deal – low monthly payments and numerous end-of-term options. The catch is mis-selling, which occurs in different ways such as:

Failure to explain key terms and conditions

PCP agreements require financial literacy, and the jargon might confuse you. Terms like balloon payments, GMFV, residual value, and mileage charge aren’t everyday words you encounter, and the failure of the dealer to explain these is grounds for deeming you were mis-sold. Also, conditions on other aspects like the implications of wear and tear, equity, and final payment should be clearly communicated, or you may unknowingly agree on terms that don’t suit you. 

Misrepresentation of balloon payment amounts

In scenarios where you choose to buy the vehicle at the end of your term, you will be asked to pay a balloon payment, which is the large final pay your dealer will require. This can be a burden if your dealer misleads you, giving you inaccurate information on the size of the payment. Often when this happens, individuals are forced to return the vehicle or agree on refinancing it under unfavorable terms – one that may put you at a financial disadvantage. 

Not disclosing commission fees

Not disclosing commission fees is a common issue with PCP, which has caused the FCA to ban discretionary commission arrangements (DCAs).  In addition, the FCA has also extended the deadline for dealers to respond to finance commission complaints up to December 2025, giving more time for the public to assess their PCP agreements and file complaints if needed.  

Commission fees have a significant influence on the interest rate and the overall cost of the contract, and failure to disclose this information blindsides the consumer. Also, with situations like this, chances are the dealer will prioritise their profit over your best interest as a customer. 

Pressuring consumers into agreements without proper affordability checks

Another common unethical practice is when the lender pressures you into signing the PCP agreement right away. It’s important that your dealer conduct an affordability check to ensure that the term you’re agreeing is something you can sustain, before letting you sign. You should be able to meet the amount you agree with so it should be realistic, to avoid financial strain on your end. It’s also fundamentally ethical to conduct affordability assessment apart from it is a legal requirement too. 

How do I know if my PCP agreement was mis-sold?

If you suspect your PCP agreement was mis-sold, the first step is to re-evaluate the agreement and revisit the transaction you had. Look out for the following red flags:

• The dealer did not conduct an affordability check. Did your dealer ask you about your current financial situation, your income, and what your current payables are? This is important as to know whether you will be able to meet the monthly payments or not. 
• Was there a commission or other fees that were not priorly disclosed? During the term of the agreement, did you pay any fees which weren’t initially agreed upon? 
• Were you misled by the dealer? If key details are not clearly explained, or worse, intentionally mis explained, then you were mis-sold.
• Does the agreement match your needs and financial capacity? Did you set a realistic mileage allowance? Is the monthly payment something you can cover alongside your other bills? If the dealer forced recommendations that have compromised you, most especially your financial situation, then this is a tell tale sign you’ve been mis-sold. 

What evidence is needed for a PCP claim?

You have identified that you were a victim of a mis-sold PCP agreement, the next step is gathering evidence to make a mis-sold PCP claim. It's important to have these prepared before making a claim, or going to your representative. The list of evidence includes:

1. PCP Agreement: It is the full contract with all the terms and conditions, which is given to both parties. 
2. Sales Correspondence: Any proof whether it be email, text or notes from conversations that proves you have or had a conversation with your dealer.
3. Proof of Payment: This includes the deposit, and payment records on your monthly instalments. 
4. Documentation of Affordability Assessment: Any proof provided by your dealer regarding affordability check
5. Promotional Material: Any brochure, or advertisement that influenced your decision

What is the typical timeline for a PCP claim?

A PCP Claim is a lengthy process, and it requires a little bit of your patience. Also, it can and will vary on the complexity of your case. A general timeline would be 2-3 months but it can be longer depending on the severity of the claim. Here’s the timeline to help you gauge how long your mis-sold PCP claim will run:

1. Initial Review (2-4 weeks): This includes gathering evidence, submitting the claim, and often even finding a service to help you process this claim.
2. Dealer/Finance Company Response (8 weeks): A dealer or finance company who have been issued a claim or PCP dispute, have up to 8 weeks to investigate and respond.
3. Resolution or Escalation (No specifics): The case can go unresolved if your dealer doesn’t agree or cooperate, which is when you can escalate it to the Financial Ombudsman. Since there are also many cases apart from PCP claims, this can take several months or even a year. 

How much compensation can I expect?

Generally, the Financial Ombudsman award 8% interest on the overpayment amount. Hence the compensation will depend on the details of the claim, and the following factors:

1. The amount that was overpaid brought about by misrepresentation.
2. Undisclosed fees and commissions that were paid.
3. The interest rate you paid
4. The duration of your agreement – the longer the agreement was, the higher you may be owed.
5. Financial loss you suffered by entering into the agreement

A successful claim may result in reimbursement of overpaid amounts, reduced debt, or other financial remedies.

Conclusion 

While PCP agreements appear a cost-effective option for consumers, you can’t ignore the possibility of mis-selling and the potential risks and pitfalls. If you’ve had a PCP agreement, be proactive and review the terms, and if you find any discrepancy, then it’s important to consult a PCP expert to explore your options.