Purchasing a car on finance is meant to be an exciting milestone, but it can quickly turn into a stressful ordeal if the car is faulty. Fortunately, you have the right and options to resolve the issue. Here’s a detailed guide on what to do when you buy a faulty car on finance.
Understand your finance agreement
The first thing you should do is go over your finance agreement carefully. Whether you’ve opted for Hire Purchase (HP), Personal Contract Purchase (PCP), or another finance option, your agreement outlines the terms and conditions that could impact your next steps.
This document holds crucial information about your rights, the dealer’s responsibilities, and what the finance company is obligated to do in case the car is faulty.
🚗 Important guide: What to look out for on your car finance agreement.
Contact the dealer immediately
As soon as you notice a fault, it’s essential to inform the dealer. Legally, they are responsible for ensuring that the car they sell is of satisfactory quality, fit for purpose, and as described.
This is your first port of call, as the dealer may be able to fix the problem quickly through repair, replacement, or even a refund, depending on the situation. Keep your communication formal and in writing, so you have a record of your complaint.
Keep detailed records
One of the most important things you can do in this situation is to document everything. Take photos and videos of the faults, especially if they are visible.
If the fault isn’t obvious, like engine trouble or transmission issues, get a report from a mechanic or dealership. Every piece of documentation could prove useful if you need to escalate the issue or seek legal action.
Request a repair or replacement
Under the Consumer Rights Act 2015, you have rights when it comes to faulty cars. If the fault develops within the first 30 days of owning the car, you are entitled to a full refund. After this period, the dealer must offer to repair or replace the car.
It’s important to remember that any repairs must be done within a reasonable time frame and without causing you significant inconvenience.
Inform the finance company
Because the car technically belongs to the finance company until you’ve made the final payment, you should inform them of the fault as soon as possible.
It’s in their interest to ensure that the car you’re financing is up to standard. Many finance companies will step in to help you negotiate repairs, replacements, or refunds with the dealer.
In some cases, they may handle the issue themselves, especially if the dealer isn’t cooperating. Keep them in the loop at every stage of the process.
Know your right to reject the car
If the car cannot be repaired or replaced, you have the right to reject it. In the first six months, this is a particularly strong right under UK consumer law, as long as the fault is significant and not just a minor inconvenience.
Once you’ve rejected the car, you should receive a refund, although the finance company may deduct money for usage during the time you had the car. Make sure you understand these deductions before making any final decisions.
Consider voluntary termination
If you’re dealing with an unfixable car and you’ve paid off 50% or more of your agreement, you may be eligible for voluntary termination.
This allows you to return the car and end the finance agreement without penalties. It’s a good option if you’re no longer interested in keeping the vehicle due to its faults.
🚗 Helpful guide: Voluntary termination car finance vs voluntary surrender.
Seek independent help if necessary
Sometimes, disputes with the dealer or finance company cannot be resolved easily. In this case, you can escalate the issue by contacting an independent body like the Financial Ombudsman Service (FOS).
They provide mediation and can help you secure compensation or repairs if the dealer or finance company refuses to cooperate. Additionally, having an independent vehicle inspection done by a third party can provide solid evidence to support your case.
Take legal action as a last resort
If all else fails, taking legal action might be necessary. While this is typically a last resort, it’s important to remember that the law is on your side.
You may need to consult with a solicitor who specialises in consumer rights or car finance disputes. With proper legal guidance, you can push for a resolution, whether that’s a refund, repair, or replacement.
Final notes
Dealing with a faulty car is never ideal, especially when you’ve purchased it on finance. But by understanding your rights and taking the proper steps, you can resolve the situation efficiently.
Start by contacting the dealer, keeping detailed records, and involving the finance company. If necessary, don’t hesitate to seek independent advice or legal action to protect your investment.
