Mis-selling can happen, and if you’ve been misled or given inaccurate information, you may be entitled to compensation. Here’s how to spot the signs that you might have been mis-sold car finance.
What is mis-sold car finance?
Mis-selling occurs when a finance product is sold to you under false pretences or without fully explaining its terms. In the world of car finance, this can mean anything from being pushed into an unsuitable finance package to not being informed of important details that could affect your decision.
Mis-sold finance is more common than you might think, especially with car dealerships and lenders eager to close a deal. Knowing what to look for can help you identify whether you were a victim of this practice.
Signs you may have been mis-sold car finance
If you’re unsure whether your car finance deal was mis-sold, there are a few warning signs to keep an eye out for. These can include:
Lack of explanation about the type of finance deal
One of the most common indicators of mis-selling is that the salesperson didn’t properly explain the type of finance you were entering into. Whether it’s a hire purchase, a personal contract purchase (PCP), or a leasing arrangement, each finance option comes with different terms and conditions.
If you weren’t given the full picture, such as the risks associated with balloon payments or mileage limits on a PCP deal, this could be considered mis-selling. You should have been able to make an informed decision based on all the relevant facts.
Hidden commissions
Another red flag is undisclosed commissions. It’s not uncommon for car dealerships to earn commission for selling finance products. However, if this commission was not disclosed to you, it could be grounds for a mis-sold claim. The Financial Conduct Authority (FCA) has recently taken steps to regulate this, but it remains a widespread issue.
You have the right to know if the person selling you the finance was receiving financial incentives to push a particular product. Without that transparency, you may have been misled.
Pressure to buy a specific product
Did the salesperson pressure you into a particular finance deal without giving you the time to consider your options? High-pressure sales tactics are another sign of mis-selling. You should never feel rushed or coerced into signing a contract before you fully understand its implications.
If the dealer made you feel like you had no choice but to accept their finance offer, or if they dismissed other forms of payment such as cash or bank loans, you may have been mis-sold.
Incorrect or incomplete credit checks
Your credit score plays a huge role in determining the type of finance you qualify for and the interest rate you’ll be charged. If the dealership didn’t perform a thorough credit check or failed to inform you of the results, you might not have been placed on the best deal for your financial situation.
A reputable dealership will always conduct proper credit checks and provide you with the necessary information so you can understand the terms of your agreement. Any deviation from this can be an indicator of mis-selling.
🚗 You might like this guide: How to improve your credit score.
Being told you had no other options
Were you informed that your only option was to take out finance through the dealership? If so, this is another red flag. You should always be given the opportunity to explore different finance providers and find the one that works best for you. If you were told that alternative finance options weren’t available, you might have been mis-sold.
Your personal circumstances were ignored
When selling car finance, lenders are required to consider your personal financial situation. This means they should assess whether the finance deal is affordable for you over the long term. If the lender or dealer ignored your financial circumstances or didn’t ask about your income, expenses, or other financial commitments, it could be a case of mis-selling.
How to claim if you were mis-sold car finance
If you suspect that you were mis-sold car finance, don’t worry – there are steps you can take to resolve the situation and potentially get compensated. Here’s what you need to do:
1. Gather your paperwork
The first step is to collect all the documents related to your car finance agreement. This includes the contract, any emails or letters you received, and a copy of your credit check if available. The more information you have, the stronger your case will be.
2. Contact the finance provider
Next, reach out to the finance provider or dealership and raise your concerns. Explain why you believe the finance was mis-sold and provide any evidence you have. Sometimes, the issue can be resolved directly with the dealership without having to escalate further.
3. Escalate to the financial ombudsman
If you don’t get a satisfactory response from the finance provider, your next step is to contact the Financial Ombudsman Service (FOS). The FOS is an independent body that helps consumers resolve disputes with financial companies. You can file a complaint online, and they’ll investigate the matter for you.
4. Consider legal action
In some cases, you may need to take legal action to get the compensation you deserve. If you believe that your case is strong enough, consider speaking to a solicitor who specialises in financial mis-selling claims. They can guide you through the process and help you understand your rights.
Stay informed and protect yourself in the future
Mis-sold car finance can be a costly mistake, but it’s one that can be rectified. The key is to stay informed about your rights as a consumer and to always ask questions when entering into a finance agreement.
Before signing on the dotted line, make sure you fully understand the terms and that the deal is right for your circumstances. If something doesn’t feel right, don’t be afraid to walk away – after all, it’s your money and your peace of mind at stake.
🚗 Read more: What is a DCA in car finance?
