Car finance mis-selling: Are you owed a payout in 2025?

A big court ruling in October 2024 has rocked the UK’s car finance world. The Court of Appeal decided that it’s against the law for car dealers to get secret commissions from lenders without telling customers. This could mean millions of drivers can now claim compensation for being mis-sold car finance.

The Financial Conduct Authority (FCA) is now looking into how widespread the problem is. If they launch a formal refund scheme, payouts could total £44 billion — making it one of the biggest compensation plans the UK has ever seen.

What was mis-sold and how?

Lots of car buyers took out finance deals not knowing the dealer got a secret cut from the lender. These commission deals often encouraged dealers to give customers loans with higher interest, just so they could earn more money.

What it means for buyers:

• Paying more each month than they needed to

• Being pushed into loans that weren’t the best option

• Getting stuck in finance deals that were unfair

Am I affected by this ruling?

You might be if:

• You bought a car on finance between 2010 and 2021

• No one told you the dealer would get commission

• You used PCP (Personal Contract Purchase) or HP (Hire Purchase) finance

Experts say some drivers could get an average of £1,100 back. And the FCA may roll out a full-scale refund program like they did for PPI.

What should I do next?

1. Check your finance documents
   Look for anything that says the dealer earned a commission.

2. Make a complaint
   First, complain to your finance provider. If they don’t respond in 8 weeks, go to the Financial Ombudsman Service (FOS).

3. Stay updated with the FCA
   A refund scheme might be on the way. Sign up to sites like MoneySavingExpert to get the latest news.

How a full car history check can help?

While the finance issue is about the loan, it's also a good time to make sure the car itself is clear of problems. A full car check will tell you:

• If the car still has outstanding finance

• Any number plate or keeper changes

• If it's ever been written off, stolen, or imported

This is especially important when buying from a private seller — a common practice in UK provinces and rural areas where dealer access is limited. In places like Yorkshire, Lancashire, and the Midlands, where car ownership is high and private sales are more frequent, cases of vehicles with hidden finance are far more common.

A quick check before purchase could save you from buying a car that legally doesn’t belong to the seller.

✅ Don’t just look at the car — check its past.

Final thoughts: a turning point for car finance in the UK

This case has revealed just how common hidden commissions were. Now, with legal action and compensation coming, buyers are in a stronger position.

People want fairness and trust when buying a car. That starts with knowing exactly what you’re signing and checking the full history of the car before you buy — especially in areas where informal car sales are the norm.