95% of Car Finance Deals Were Mis-Sold: What You Need to Know
The October 2024 Court of Appeal judgement has sent shockwaves through the motor finance industry, providing a major win for borrowers. The ruling found that lenders acted unlawfully by failing to disclose commission payments to car dealers, a practice that was widespread in the UK for many years. Here’s what the judgement means for borrowers and how you could benefit.
The Scale of the Problem
95% of Car Finance Agreements Had Commissions: According to industry estimates, nearly all car finance agreements included commissions paid by lenders to car dealers or brokers.
Lack of Transparency: Historically, customers were not informed about these commissions, let alone given the opportunity to consent to them.
Cost to Borrowers: These commissions were often as high as 15% of the car’s value, significantly inflating the total cost of finance agreements.
What the Court Ruled
The Court of Appeal determined that lenders breached their legal obligations by:
Failing to Disclose Commissions: The payment of commissions was hidden from borrowers, making the agreements unfair.
Lacking Informed Consent: Borrowers did not provide informed consent to these payments, a legal requirement that lenders ignored.
This ruling means that lenders must refund these commissions to affected customers. In some cases, they may also need to refund:
Interest paid on the loan.
Fees associated with the agreement.
For more details, you can read the full Court of Appeal judgement here
What Borrowers Can Claim
Commission Refunds: If your car finance agreement included undisclosed commissions, you are entitled to a refund of the amount paid.
Interest and Fees: In cases where the agreement is deemed particularly unfair, lenders may also have to refund all interest and fees paid under the agreement.
How to Check Your Eligibility
If you purchased a car on finance before October 2024, there’s a strong chance your agreement included hidden commissions.
Use MotorPayout’s eligibility checker to assess your case in minutes
Why This Matters
This ruling is a game-changer for consumers. It holds lenders accountable for years of unfair practices, giving borrowers the opportunity to recover significant sums of money. If you’ve been affected, now is the time to take action.
