5 Signs a Car Finance Agreement May Have Been Mis-Sold

For car finance agreements taken out between April 2007 and November 2024, there may be questions about whether all the relevant information was explained clearly before the agreement was signed.

Not every car finance agreement was mis-sold. However, some customers may not have received all the information needed to make an informed decision. Details about commission arrangements, affordability or optional extras may not always have been explained clearly.

The following signs could suggest that a car finance agreement is worth reviewing.

1. The Finance Agreement Was Not Clearly Explained

Before a finance agreement is signed, the customer should receive enough information to understand how it works and what it will cost.

An agreement may be worth reviewing if:

The total amount repayable was not made clear.
The interest rate or monthly payments were not properly explained.
The paperwork was rushed through without enough time to read it.
Questions about the agreement were not answered clearly.

This does not automatically mean the finance was mis-sold. However, customers should be given enough information to make an informed decision.

2. It Was Not Clear Whether Commission Was Involved

When a dealer arranges car finance, a commission payment may be involved. This is not the case with every agreement.

In some cases, customers may not have been told whether commission was involved or how a commission arrangement could affect the finance offered.

If it was not made clear whether the dealer could receive commission from the lender, the agreement may be worth reviewing.

3. The Monthly Payments May Not Have Been Affordable

Before approving finance, a lender should consider whether the repayments are affordable based on the information available at the time.

An agreement may be worth reviewing if:

Insufficient questions were asked about income and regular household spending.
It was not properly assessed whether the monthly payments would be affordable.
The payments became difficult to manage soon after the agreement began.

Difficulty making payments does not automatically mean an agreement was mis-sold. However, affordability can be an important factor when considering how the finance was arranged.

4. There Was Pressure to Sign

Buying a car is a significant financial commitment. Customers should have enough time to understand their options before making a decision.

Examples of sales pressure may include:

Suggesting that an offer would disappear unless the agreement was signed immediately.
Rushing through the paperwork.
Discouraging comparisons with finance from other lenders.
Presenting finance as the only practical option without discussing alternatives.

Customers should be given sufficient time to read the documents, ask questions and consider whether the agreement is suitable.

5. Optional Extras Were Not Properly Explained

Some car finance agreements may include optional products such as:

GAP insurance
Extended warranties
Paint or alloy wheel protection
Service plans

These products are not necessarily a problem when their purpose, cost and optional status are made clear.

However, an agreement may be worth reviewing if optional extras were added without a clear explanation or presented as compulsory when they were not.

What Happens If One or More of These Signs Applies?

The presence of one or more of these signs does not necessarily mean that a car finance agreement was mis-sold or that a valid complaint exists.

However, an agreement may be worth reviewing if important information was not explained clearly or the customer was not given enough information before signing.

Relevant finance paperwork can help establish what was agreed and what information was provided. Where uncertainty remains, further guidance can be sought from an appropriate source.

Consumers can complain directly to their lender without using a claims management company.

Key Takeaway

The five main questions to consider are:

Was the finance explained clearly?
Was it made clear whether commission was involved?
Were the monthly payments assessed as affordable?
Was there pressure to sign?
Were optional extras properly explained?

Concerns in any of these areas do not automatically mean an agreement was mis-sold. They may, however, provide a reason to review the agreement and the information provided at the time.