Can You Reclaim Car Finance if You’re Still Paying?

Buying a car is a significant financial commitment, and for many UK residents, the option of financing the vehicle rather than buying it outright is often the more practical choice. Car finance can offer flexibility, but unfortunately, not all car finance agreements are created equally. Some individuals may find themselves in a situation where they suspect they have been mis-sold their car finance. If you’re still in the process of paying off your car loan, you might be wondering: Can you reclaim car finance if you're still paying?

In this article, we’ll explore the possibility of reclaiming car finance, what steps you can take if you think you've been mis-sold your agreement, and what options are available for those still in the repayment period. Whether you're still making monthly payments or have already paid off your agreement, it’s important to understand your rights.

Before we dive into the reclaim process, let’s quickly recap the types of car finance agreements available in the UK. This can help you identify if your agreement might be eligible for a claim.

Personal Contract Purchase (PCP): This is one of the most common forms of car finance in the UK. With PCP, you pay an agreed amount every month, typically lower than a traditional loan. At the end of the term, you can either pay a balloon payment to own the car outright or return the car.

Hire Purchase (HP): A hire purchase agreement is a more straightforward car loan. You agree to pay a fixed amount every month, and at the end of the term, the car is yours. Unlike PCP, there’s no option to hand the car back unless you want to pay off the full balance early.

Personal Loan: Some buyers choose to take out a personal loan from a bank or other financial institution to buy a car. In this case, the loan is typically unsecured, meaning that you are personally responsible for repaying it.

Each type of agreement has its own advantages and risks. If you've entered into a contract and feel that it wasn’t explained to you correctly or wasn’t suitable for your financial situation, you may have grounds for a claim.

Mis-selling occurs when a product is sold to you under false pretences or when the seller fails to explain the product in full, leaving you unaware of key details. With car finance, mis-selling can happen in a number of ways, such as:

If any of these situations sound familiar, it’s possible that your car finance agreement was mis-sold, and you may be entitled to reclaim some of the money you’ve paid.

The short answer is yes, it’s possible to reclaim car finance even if you’re still paying. If you believe you were mis-sold your car finance agreement, you don’t need to have finished paying off the loan to take action.

The process of reclaiming car finance typically involves contacting the lender or finance provider and filing a complaint. If the lender is unable to resolve your issue to your satisfaction, you can escalate the matter to the Financial Ombudsman Service (FOS). They can look into your case and, if necessary, make a ruling in your favour.

It’s important to note that you may not receive a full refund for the amount you’ve paid, but you could be entitled to compensation or a reduction in the total amount you owe. This could include:

If you’ve been paying off your car finance for a significant amount of time, and your agreement is deemed to be mis-sold, the compensation could be significant, and the terms of your agreement may be altered to your benefit.

If you suspect that your car finance has been mis-sold, the first step is to review your agreement carefully. Look for any of the following signs that may indicate mis-selling:

If any of these points raise concerns, you may have grounds to make a claim. Here's what to do next:

1. Gather Evidence Start by gathering all relevant documents, including your car finance agreement, correspondence with the lender, and any notes you made during your conversations with the salesperson or dealer. If you were misled or pressured into signing, it will be helpful to have a record of these interactions.

2. Contact Your Lender or Finance Provider You should always start by raising a complaint directly with your lender or finance provider. They are required by law to respond to your complaint and resolve the issue within a certain timeframe. If they reject your complaint or fail to respond, you have the option to escalate the matter.

3. File a Complaint with the Financial Ombudsman If you are unable to resolve the issue directly with the lender, you can contact the Financial Ombudsman Service. They offer an impartial review of disputes between consumers and financial institutions and can make decisions that are legally binding. The FOS will investigate your case, assess the evidence, and decide if you’re entitled to compensation.

4. Seek Professional Help If you’re unsure whether you have a legitimate case, you may want to consider seeking professional advice from a claims management company or solicitor. These experts can help guide you through the process and ensure that your case is handled appropriately.

There are time limits for making a claim about mis-sold car finance. In general, you must raise a complaint within six years of entering the finance agreement, or three years from the point at which you first became aware (or could reasonably have become aware) that you were mis-sold the finance.

It’s crucial not to delay. If you wait too long, you may lose your right to make a claim. The sooner you start the process, the more likely you are to achieve a positive outcome.

If you've already paid off the car finance loan in full, you can still reclaim money if the finance was mis-sold. Even if the car has been paid off, you might be entitled to a refund for overpaid interest, excessive fees, or other charges that were part of the agreement.

In this case, the process would still involve contacting your lender and filing a complaint. If the complaint is upheld, you could receive compensation or a refund of the amount you overpaid.

Reclaiming car finance is not just for those who are still paying off their loans. Whether you are still making monthly payments or have finished paying, if you believe that you’ve been mis-sold a car finance agreement, you have the right to challenge the terms and potentially reclaim some of the money you’ve paid. The process involves raising a complaint with your lender, escalating the issue to the Financial Ombudsman if necessary, and gathering evidence to support your claim.

It’s important to act quickly, as there are time limits for making a claim. With the right support, you can reclaim what you’re owed and ensure that your finance agreement was fair and transparent from the start.

If you're unsure whether your car finance agreement was mis-sold or need assistance with your claim, reclaimingcarfinance.co.uk can offer expert guidance and support to help you navigate the reclaim process. They can assess your situation and assist you in recovering the money you deserve.