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PCP Claims in the UK
Your Guide to Qualification and Returns
Personal Contract Purchase (PCP) is one of the most popular ways to finance a car in the UK. However, if you feel misled or unfairly treated during your PCP agreement, you may be eligible to make a PCP claim. This article explores what a PCP claim is, how to qualify, and the process of returning a car under a PCP contract.
What is a PCP Claim in the UK?
A PCP claim refers to a formal complaint or legal action taken by a consumer who believes they were mis-sold a PCP finance agreement. These claims usually arise when the finance provider, car dealership, or broker:
- Failed to explain how PCP works
- Didn’t disclose the total cost of borrowing
- Didn’t assess affordability properly
- Failed to explain who owns the car during the contract
- Did not clearly explain the final balloon payment
In recent years, many drivers have discovered they may have been overcharged or misinformed, particularly regarding interest rates, commission, or long-term affordability, leading to a rise in PCP compensation claims.
How to Qualify for a PCP Claim
To be eligible for a PCP claim in the UK, you typically need to prove one or more of the following:
1. Mis-Selling by the Dealer or Finance Company
You were not provided with sufficient or clear information regarding:
- The interest rate
- The balloon payment at the end of the term
- Ownership conditions
- Early termination fees
2. Undisclosed Commission
If a dealer received a commission from the finance provider and this was not disclosed, you may have been misled. The Financial Conduct Authority (FCA) has clamped down on this practice, making this a common basis for claims.
3. Affordability Issues
The dealer or broker failed to conduct an affordability check, resulting in you taking on finance that was unsuitable for your financial situation.
4. Agreement Signed Under Pressure
If you were rushed, pressured, or not given time to review the full terms of the contract, this may also support your claim.
How to Return a Car Under a PCP Claim
Returning your car under a PCP agreement can happen in several ways, and it’s important to understand your rights:
1. Voluntary Termination (VT)
Under the Consumer Credit Act 1974, you have the legal right to return the car once 50% of the total amount payable has been repaid (this includes fees and the balloon payment). This is called Voluntary Termination.
Steps to Voluntary Termination:
- Notify the finance provider in writing that you wish to voluntarily terminate your contract.
- Ensure the car is in fair condition, allowing for reasonable wear and tear.
- Settle any outstanding payments if you haven’t reached 50% yet.
2. Voluntary Surrender
If you haven’t paid 50% and cannot afford to continue the agreement, you can return the car through Voluntary Surrender. However, this could affect your credit score and you’ll be liable for the remaining balance minus the car’s value at auction.
3. End of Agreement Options
At the end of your PCP term, you usually have three options:
- Pay the balloon payment and keep the car
- Hand the car back (no further payment if mileage/condition terms are met)
- Part-exchange the car for a new one
If you’re making a claim due to mis-selling or another issue, speak to the finance provider and consider seeking legal or professional advice before returning the vehicle.
Final Thoughts
If you think you’ve mis-sold a PCP agreement, it’s worth investigating your rights and possibly initiating a PCP claim. Whether you’re at the start, mid-way, or end of your PCP term, you have legal protections under UK law to ensure fair treatment.
Key Takeaways:
- A PCP claim can help you recover losses from a mis-sold car finance deal.
- Qualification depends on lack of transparency, mis-selling, or undisclosed commission.
- You can return your car through Voluntary Termination or other end-of-term options.
Always keep documentation and communication records, and if unsure, consider reaching out to a financial advisor or legal specialist.