Car finance refunds 💰

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What are car finance refunds?

Car finance refunds relate to situations where customers may have been overcharged or treated unfairly when taking out car finance agreements. This usually centres around how interest rates were set, whether commission was properly disclosed, and whether the agreement was fair and transparent. Regulators have been reviewing historic car finance practices for PCP and HP agreements, which has opened the door for some consumers to seek compensation.

Not everyone will qualify, but checking is free and can be worth doing.

Big update: the FCA has now announced a mass redress scheme

On 30 March 2026, the Financial Conduct Authority confirmed that a mass redress scheme will go ahead for unfair motor finance.The regulator expects around 12.1 million agreements from 2007 to 2024 to fall within scope, with around £7.5 billion expected to be paid out overall. The scheme is designed to be “mass” redress, meaning firms will not just deal with people who complain. They will also be expected to identify customers who were mis-sold and contact them directly.

Even so, it is still sensible to complain now if you think you may have been affected. Doing that should reduce the risk of missing out because of old contact details, house moves or name changes, and it may also mean you get paid sooner than those who simply wait to be contacted.

Who might be eligible?

You might be eligible if you took out PCP or HP car finance between 6 April 2007 and 1 November 2024 and the commission, lender relationship or pricing was not properly explained to you.The scheme can cover cars, vans, motorbikes and campervans. It does not cover leases, and genuine 0% finance agreements are not included in the FCA’s redress scheme.You may still be eligible even if the agreement has been fully paid off, you no longer own the vehicle, or the vehicle was repossessed. If you had more than one eligible finance agreement, you could potentially be due more than one payout.

The scheme also covers agreements taken out for personal use, including commuting, and some sole traders or small partnerships where the borrowing was under the relevant threshold. Limited company borrowing is generally outside the scope of this mass redress scheme.

The main types of car finance mis-selling being looked at

The FCA scheme covers three main types of non-disclosure. The first is discretionary commission arrangements. This is where a broker or dealer could increase the interest rate on your agreement to earn more commission, without properly telling you. These arrangements were banned from 28 January 2021, so this part mainly affects older agreements. The second is hidden contractual ties. This is where a broker may have suggested they were searching the market properly when in reality they were tied to one lender or one lender had a strong advantage in the process. Some obvious manufacturer-linked arrangements may now be excluded where the FCA considers the relationship was sufficiently clear. The third is unfairly high commission. This covers cases where the commission level was extremely high relative to the total cost of credit and the loan, and that arrangement was not properly disclosed to the customer.

How much could you get?

There is no set refund amount, and no payout is guaranteed. The FCA’s latest estimate is that the average payout under the mass redress scheme could be around £830 per agreement, though some cases may receive less and some may receive more depending on the facts of the agreement. That is only an estimate, not a promise. Redress will depend on the details of the finance deal, the type of mis-selling involved and whether the lender decides compensation is due.

How does the process work?

Broadly, the process is fairly simple. First, the lender reviews the agreement and checks whether it falls within the scope of the redress scheme or a complaint. Second, the lender looks at whether any of the relevant forms of mis-selling took place. Third, if compensation is due, the lender should make an offer and explain what happens next. If you are unhappy with the outcome, there may still be routes to escalate the matter further, depending on the circumstances.

The process is unlikely to be instant. It may take time, especially given the large number of agreements expected to be reviewed.

Is it better to wait or complain now?

In theory, you may not need to do anything because firms are expected to identify affected customers and contact them. In practice, it still makes sense to complain now if you think you may have been affected. That is especially true if your agreement is older, if you have moved address, changed your email, changed your name or no longer have the paperwork to hand. Complaining now should reduce the chance of being missed and may also put you in a better position for a quicker outcome.

The easiest free way to do it yourself

If you want to make a complaint for free, the easiest route at the moment is MoneySavingExpert’s free car finance reclaim tool. The tool helps you build a complaint email using your details and points it at the correct lender. It now covers all three main categories of mis-selling included in the FCA scheme, not just discretionary commission.

For most people, this is likely to be the best starting point because it is free, simple and does not involve handing over a chunk of any compensation to a third party.

Do you need a claims company?

No. Most people do not need a claims company for this. A claims company may make the process feel more hands-off, but it will usually take a cut of any compensation you receive. It also does not increase the amount you are entitled to and does not unlock extra compensation that would not otherwise be available. What it offers is convenience rather than a better outcome.

If you are comfortable spending a few minutes using a free complaint tool or contacting your lender directly, doing it yourself is usually the better-value option.

Could court action pay more?

Potentially, yes. Some past court cases have led to higher awards than the FCA’s redress estimates. However, going down the court route is more involved, more uncertain and may mean giving up a significant share of any payout in legal or claims handling fees. For many people, the FCA redress scheme will be the simpler and more realistic route. That does not mean court is always the wrong choice, just that it is not the easiest option for most consumers.

Important things to know

You cannot be blacklisted simply for complaining about car finance. If somebody who may have had an eligible agreement has passed away, it may still be possible for an executor or beneficiary to pursue the complaint on behalf of the estate. Even if your agreement does not fall within the FCA’s mass redress scheme, you may still have had other grounds for complaint, such as affordability issues, lack of clarity over the contract, or problems with the vehicle itself.

Final thoughts

Car finance refunds are not guaranteed, and they are not simply free money. But if you used PCP or HP finance between 2007 and 2024, it is worth checking whether you may have been affected, especially now that the FCA has confirmed a mass redress scheme will go ahead. For most people, the best move is to make a free complaint now rather than wait and hope a lender finds your details later. It costs nothing to check, and if you are eligible, that should give you the clearest route to any refund you may be due.