Personal Contract Purchase (PCP) finance agreements have become one of the most popular ways to finance a car in the UK. But many customers mis-sold their agreements, meaning they could be owed thousands in compensation. If you’ve had a PCP deal in the past six years, you may be eligible to claim. This guide will explain how to calculate your potential refund quickly and accurately.
What Is a PCP Claim?
A PCP claims are legal complaint made against a lender or car dealer for mis-selling a finance agreement. If you were not told about commission fees or given misleading information about your contract, you could claim compensation. The Financial Conduct Authority (FCA) is currently investigating widespread mis-selling in the motor finance industry.
Who Can Make a PCP Claim?
Not everyone who took out a PCP agreement is entitled to a refund. You may have a valid claim if:
- You were not informed about the commission the dealer earned from your agreement.
- Your monthly payments were inflated due to undisclosed fees.
- You were pressured into signing without full transparency on the costs.
The key to winning a claim is proving that you were misled or not given fair financial advice before signing the contract.
How to Calculate Your PCP Claim in Minutes
To estimate your potential refund, follow these three simple steps:
Step 1: Find Your PCP Agreement Details
You’ll need to locate your finance agreement or bank statements showing your payments. The essential details to check include:
- The total amount borrowed
- The interest rate and monthly repayments
- Any balloon payment or final settlement amount
If you don’t have the paperwork, you can request it from your lender.
Step 2: Identify Unfair Charges and Hidden Fees
Look for signs that you may have overpaid due to mis-selling. These can include:
- Excessive interest rates compared to standard market rates at the time.
- High fees or commission payments that were not disclosed.
- A balloon payment that was not properly explained.
Many lenders charged interest on commission payments without informing the customer. The FCA estimates that 95% of PCP customers were not told about dealer commissions, meaning they may have a case for compensation.
Step 3: Use a PCP Refund Calculator
Several free online calculators can give you an estimate of your potential claim. These tools work by:
- Comparing your payments with fair market rates.
- Identifying hidden charges or excessive interest.
- Estimating the total compensation you may be owed.
If you believe your agreement was mis-sold, it’s worth submitting a claim. Many firms offer no-win, no-fee services, meaning you won’t pay unless you receive compensation.
How Long Does a PCP Claim Take?
Once you submit your complaint, the lender has eight weeks to respond. If they reject your claim or fail to reply, you can escalate it to the Financial Ombudsman Service (FOS). The entire process typically takes between three to six months, depending on case complexity.
How Much Can You Claim?
The amount you can claim depends on how much you overpaid. On average, successful claims range between £1,000 and £5,000. If your agreement included high commission fees or inflated interest rates, you may be entitled to more.
The Financial Ombudsman has ruled in favour of many consumers in recent months, setting a strong precedent for claims. If you suspect you were misled, it’s worth checking your agreement and starting the process.
Final Thoughts
Checking if you’re eligible for a PCP refund only takes a few minutes. If you were not told about dealer commissions or hidden fees, you could be owed thousands. Gather your paperwork, use an online calculator, and consider submitting a claim. The FCA is cracking down on mis-selling, so now is the best time to take action.