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Elevated and inequitable interest rates, concealed commission charges, and the absence of proper affordability assessments stand as stark examples of the tactics employed by unethical lenders to take advantage of those looking to purchase a vehicle.

How can we prevent them from continuing these harmful actions and damaging consumers’ trust in the car finance industry? The solution lies in pursuing Car Finance Claims.

How Car Finance Claims Will Keep Lenders Accountable

Car finance claims are crucial in holding dishonest companies accountable. They provide those seeking financing a voice against abusive practices. By going after companies that use these tricks, consumers create a support network and raise society’s awareness of the problem.

Moreover, filing a claim against a lender can lead to legal scrutiny of their practices. Courts and regulatory bodies can impose fines, demand compensation for affected consumers, and even revoke licenses in extreme cases. The threat of legal consequences serves as a deterrent against unethical behaviour.

Car finance claims often require investigation by regulatory bodies, which can lead to increased monitoring of the entire industry. These investigations can uncover systemic issues and lead to broader regulatory reforms, ensuring that all lenders adhere to fair practices.

It’s also important to highlight that lenders are conscious of their reputation in the market. Companies sued for abusive practices against their clients have their reputations significantly damaged, which requires them to correct their course. They are forced to come forward to explain what happened and what they will do to ensure that unethical and potentially illegal activity ceases. In a competitive market, reputation can be a significant asset or liability, incentivising lenders to act ethically.

The financial ramifications of car finance claims, including compensation payouts and legal costs, directly affect lenders’ bottom line. The potential for economic loss can be a powerful motivator for companies to maintain fair lending standards to avoid lawsuits.

When Can You Make a Car Finance Claim?

In a nutshell, whenever you suspect that the lender was not honest when they sold you the finance agreement. Here are some situations where you can make a car finance claim:

  • Mis-sold Finance: If the credit was not suitable for your needs or financial situation, and this was not adequately assessed or explained to you, you might have grounds for a claim. This includes not being fully informed about the interest rates, terms, or total cost of the offer.
  • Lack of Affordability Checks: Lenders are required to conduct affordability checks to ensure you can comfortably meet the payment obligations. If they failed to perform these checks properly, leading you into financial distress, you may be eligible for a claim.
  • High and Unfair Interest Rates: In case interest rates applied to your car finance are excessively high compared to the market rate at the time of the agreement, and you were not properly informed about this, you may be able to claim, particularly if your credit risk did not justify the high rates.
  • Undisclosed Commission Fees: Should the commission earned by the lender or broker from selling you the credit product have unjustly biased their recommendation, then you may have grounds to sue.
  • Incorrect Information or Misrepresentation: If you were provided with inaccurate information or the terms and conditions of the loan were misrepresented to you, leading to an unsuitable agreement, this could warrant a claim.
  • Early Settlement Issues: If you were penalised for settling your loan early or were not informed about your rights and the process for early settlement, you might be eligible to make a claim.
  • Voluntary Termination Rights: Under certain agreements, you can return the vehicle and terminate the agreement after paying off a specific portion of the loan. If these rights were not clearly explained to you, or you were obstructed in exercising them, you may have grounds for a claim.

How Long Does the Claims Process Take?

The claims sector has many variables at play, and it can be a very complex industry, so the length of a claim can vary. As of early 2024, the Financial Conduct Authority (FCA) is investigating the mis-selling scandal within the car finance industry. The current timeframe is that the FCA expects that they will complete their investigation in September 2024. When the investigation closes, they will announce their next steps, which may involve implementing a redress scheme. If they rule that consumers have been mis-sold, this scheme will outline how much compensation will be awarded and how the compensation will be paid to consumers. However, until then, a lot is unknown, and we won’t know much about the next steps until September. We estimate that it could take between three to six months for claims to be processed after the redress scheme is confirmed.

There is no set deadline for submitting your car finance claim. If the FCA announces a redress scheme, they may also confirm a time limit by which people must put in a claim. It’s highly recommended that you submit your claim as early as possible. Lenders will likely have to deal with large volumes of car finance claims, so you will avoid delays and be placed higher on the list if you start your claim today. Once your details are registered, you can sit back and wait in peace until the FCA announces the next steps later this year.

How to Start Your Car Finance Claim

In case you find yourself in any of these situations, the first step is usually to contact your credit provider to discuss the issue. If dissatisfied with their response, you can escalate your claim through formal complaint channels, such as the Financial Ombudsman Service in the UK, or talk to our team to understand your options and the best course of action.

Remember, specific terms and conditions of your agreement and the laws of your jurisdiction will impact your ability to make a complaint. Use our free eligibility checker to see if you can claim. The check takes less than two minutes.

Car finance claims are pivotal in maintaining industry integrity, protecting consumer interests, and ensuring that lenders who engage in unethical practices are held accountable. The process seeks to rectify individual grievances and aims to foster a fairer, more transparent car finance industry.