PCP Claims and What You Should Know
- Are PCP claims real and how do they work?
- Mini mis-sold PCP claim calculator
- The ins and outs of mis-sold PCP claims
Personal contract purchase (PCP) is perhaps the most popular way of buying a new car. A lot of the time, though, PCP deals were mis-sold, which means that you may have been pushed into a deal that wasn’t right for you. PCP claims are realistically about setting this right.
This article will explain how PCP claims are real. It will also detail various aspects of the contract you should be aware of. Mis-sold car finance can happen for many different reasons. From the dealership not disclosing how much commission they were receiving to not explaining everything properly, many situations count.
Are PCP claims real? They absolutely are, and this article will explain everything you need to know about them before you make a claim of your own.
Ready to start your PCP claim? Use our eligibility checker to see if you qualify. It only takes a minute.
What's On This Page?
Click the links below and head straight to a specific section of the article.
What Are Mis-sold PCP Claims?
When you took out your finance agreement with your vehicle, you may not have been properly informed about all aspects of the deal, or misled in some way. Car finance mis-selling could include any of the following:
Hidden commissions
Unexplained extra mileage charges
Confusion about ownership of the vehicle (during and after the agreement)
A cheaper offer was available but not discussed
A deal that was unaffordable for you
Many more situations count towards being able to make a PCP claim, but it all boils down to you being compensated for this mis-selling.
What a PCP Agreement Is
Similar to hire purchase (HP) agreements, PCP comes with several differences. You pay a deposit, make monthly payments throughout the time you have the vehicle, and then either pay a lump sum to keep the car or use its value to put towards the deposit of another PCP deal. Alternatively, you can give the car back and not pay anything to the car dealer.
Are PCP claims really confusing? Unlike the ins and outs of a PCP deal, PCP claims are really straightforward.
Mis-selling Practices
PCP contracts have been under direct scrutiny from the Financial Conduct Authority (FCA) for some time now as it was revealed that a number of car dealerships had not been transparent enough with their customers.
Typical PCP mis-selling includes poor advice about financial options, not disclosing the commission structure and not being clear on how PCP finance actually works. A mis-sold PCP claim is really about making sure you receive compensation for any inconvenience you may have experienced.
Interest Overcharge Example
You may have been informed about a flat rate of interest of 5% on your deal. At the time, no other rate was offered, so the 5% sounded pretty low. In actuality, because the flat rate of interest increases the APR, you were then paying over 10% APR.
If you then made a mis-sold PCP claim, there’s a chance you could get money back based on the difference between the interest you were charged and the cheapest rate available at the time. In the same example, the cheapest option was a 2.5% flat rate. You would then receive the 2.5% difference over the course of the agreement, plus interest.
How Do PCP Claims Work?
For any car that you had on PCP finance in the last ten years, you can make a claim. Mis-sold PCP claims work against the car that you owned through the deal. If you had several cars on PCP in the last decade, you can make a claim for every single one, which will entitle you to more compensation.
Are PCP claims really worth it? With the average compensation around £3,000 per vehicle, they are worth your time. Depending on the length of your contract(s) and how much you were charged, you could be owed more than shorter deals.
Types of Claim
There are several ways you can make a PCP claim. While Martin Lewis has recently highlighted the issue faced by around 40% of consumers with undisclosed commissions, there are other situations that still make you eligible.
If your PCP deal wasn’t fully explained and there was confusion over any aspect of it, then you could potentially receive compensation. This is also true if you were forced into a deal that wasn’t right for you or couldn’t comfortably afford it. Any type of finance deal or loan shouldn’t make you suffer financially as a result of repayments.
Mini Mis-sold PCP Claim Calculator
To discover if you qualify to make a claim, you can use the questions below to help get a better idea about whether you can make a mis-sold PCP claim.
Are PCP claims really for me? They are, if:
Your PCP deal was within the last 10 years
You were charged more than 4.9% APR
The contract wasn’t explained clearly to you, including fees, total cost and interest rates
You didn’t receive as competitive offers as you could have been
Ownership of the vehicle during the length of the contract wasn’t explained properly
You were not aware of a mileage limit
The loan you were given was unaffordable, and the seller knew this
The seller didn’t run proper affordability checks
Alternative financial options were not offered to you
Add-on insurance was pushed on you, but you didn’t need it
You were informed that high costs would be incurred if you damaged the vehicle
PCP claims are real and available for HP agreements as well. Don’t feel as though you have to miss out just because you had a different kind of financial agreement.
Key Points About PCP
In order to understand more about the claims process, it’s important to be aware of several points specifically about PCP.
Ownership
When you take out a car with PCP, the car does not belong to you. It only becomes your property after you make the final balloon payment and pay off any remaining debts from the contract. PCP claims are real in that they compensate you for this confusion.
Credit
You need to pass a credit check before you are allowed to make use of a PCP deal. This is one of the most basic sets of criteria, and if the dealer you took out a PCP agreement with did not run a credit check, you were mis-sold.
PCP claims are real value for money in that they can give you a few thousand pounds for something that was not right for you in the first place. Alongside the credit check, the monthly payments need to be realistic and suitable for you. If this wasn’t the case, then you were also mis-sold.
Granting a financial deal to a customer without proper checks or ignoring their financial situation is a type of unaffordable lending. This could cause you to pile up more debt as you borrow more to pay off existing loans. Anyone who struggled with monthly repayments can – and should – make a PCP claim.
Mileage and Charges
When you take out a PCP deal, there are set limits to what you can do. One of the most overlooked (or unexplained) parts of the contract is the mileage limit. In order to guarantee a minimum future value of the vehicle, the dealer specifies that you can only drive so far every year.
If you exceed the mileage limit, you will be charged. Your contract will tell you how much you’ll have to pay per additional mile. This is because the dealer is expecting to receive the car back at the end of the contract. PCP claims are really about fully understanding the terms and conditions of the finance option and if it’s right for you.
Pro Tip – Ask for Examples of Damage
Like any extra mileage, excessive wear, tear and damage will also set you back. Before you get drawn in by the car of your dreams, it’s worth asking the dealer for examples of how they judge damage. Having written examples will save you a headache further down the line.
Compared to all the fine points of a contract, a PCP claim is much simpler to understand. As a rule of thumb, if it’s confusing and you’re not 100% sure, then you could be due compensation.
Are PCP Claims Really Hard to Make?
Take Out the Legwork – Use a Claims Management Company
PCP claims are really easy to process for claims management companies. With a panel of legal experts at their disposal, they can locate your paperwork and see if you have grounds to make a claim. This can be even more helpful if the company that gave you your finance is no longer trading or has been taken over by another firm.
A claims management company will even process the whole thing for you, making sure you receive as much as you’re entitled to. If legal proceedings need to be made, they will also do this on your behalf. As courts can be incredibly daunting, this is a lot of hassle removed.
Are PCP claims real? They are, and there are many companies out there that can process your claim for you.
Dedicate the Time to Do It Yourself
The claims themselves can be a lengthy process if you’re looking to do it without any help. Mis-sold PCP claims need to be put towards your finance provider or credit broker in the first instance as they need a chance to make it right.
Time Frame
If you write to them about a claim, they have eight weeks to settle it, according to FCA regulations. PCP claims are really all about waiting, as even if the provider doesn’t respond or you’re not happy with their response, you’ll then have to present your case to the Financial Ombudsman Service (FOS) and then wait up to three months for them to look into it.
Supporting Evidence
If you wish to submit a claim yourself, it will take lots of evidence, and you will need to present this to the relevant companies as and when needed. This could be much more difficult if you no longer have the paperwork or the company you used has since gone bust.
Alternatively
The alternative is to simply use a claims management company as they can do all the hard work for you. These firms work on a ‘no win, no fee’ basis, which means you won’t be charged if you’re unsuccessful.
