If you’ve been mis-sold a car finance agreement, you may be entitled to significant compensation. However, the amount of compensation you can expect to receive varies depending on the specifics of your case. Understanding how compensation is calculated and what factors influence the amount you’re owed is crucial to ensure you get the best possible outcome. This guide will explain what you can expect from a successful car finance compensation claim. 

 

How is Car Finance Compensation Calculated?

The compensation you receive in a car finance reclaim typically covers the extra costs you incurred due to the mis-selling. This often involves reclaiming the difference between the interest rate you were charged and what you should have been charged without any hidden commissions. 

Key factors that influence the amount of compensation include: 

  • Interest Rate Difference: If your interest rate was inflated due to undisclosed discretionary commission arrangements (DCAs), you could reclaim the difference between the rate you paid and a fair market rate. 
  • Loan Amount: The higher your loan amount, the more significant the impact of an inflated interest rate, which could lead to a higher compensation payout. 
  • Loan Duration: The length of your loan term also plays a role. Longer loan terms mean more interest paid, which could increase your compensation if the interest rate was unfairly high. 
  • Fees and Charges: Any additional fees or charges that were not properly disclosed or explained may also be included in your compensation. 

Our How to File Car Finance Claims guide provides detailed information on how to calculate potential compensation based on your specific circumstances. 

 

Typical Compensation Amounts

While compensation amounts can vary, many consumers who have successfully reclaimed mis-sold car finance have received significant sums. On average, consumers can expect to reclaim between £1,000 and £3,000, although higher amounts are possible in cases involving large loans or particularly egregious mis-selling practices. 

For example: 

  • Example 1: A consumer who took out a £10,000 loan with an inflated interest rate could reclaim around £1,100 if the rate was increased by just a few percentage points due to undisclosed commissions. 
  • Example 2: A borrower with a larger loan, such as £20,000, who was charged a much higher interest rate than they should have been, could potentially reclaim £3,000 or more. 

It’s important to note that each case is unique, and the actual amount you could receive will depend on the specific details of your finance agreement. 

 

What to Expect from the Compensation Process

The process of reclaiming compensation can take time, but understanding what to expect can help you navigate it with confidence: 

Initial Claim Filing: 

After you file a claim with your finance provider, they are required to acknowledge your complaint and investigate the matter. This process can take up to eight weeks. 

Response from the Provider: 

If the provider agrees that your finance deal was mis-sold, they may offer you a compensation settlement. If they reject your claim or offer an unsatisfactory settlement, you have the option to escalate the matter. 

Escalation to the Financial Ombudsman: 

If your claim is rejected, you can take your case to the Financial Ombudsman Service (FOS), an independent body that resolves disputes between consumers and financial institutions. The FOS will review your case and make a final determination on the compensation amount. 

Receiving Your Compensation: 

Once your claim is approved, either by the provider or the FOS, you will receive your compensation. This payment can be made directly to your bank account or used to reduce any remaining balance on your finance agreement. 

Our Mis-Sold Car Finance Explained guide offers more insights into the steps involved in the reclaim process and how to ensure your claim is handled correctly. 

Factors That Can Affect Your Compensation

Several factors can influence the outcome of your compensation claim: 

  • Quality of Evidence: The more detailed and well-documented your claim, the stronger your case will be. Providing clear evidence of mis-selling, such as copies of your finance agreement and payment records, can significantly improve your chances of a successful claim. 
  • Timeliness: Acting quickly is important, as there are often time limits for filing a claim. The sooner you file, the less likely you are to encounter issues with deadlines. 
  • Provider’s Response: The way your finance provider responds to your claim can also affect the outcome. Some providers may be more willing to settle claims quickly, while others might require further escalation. 

Our team of finance claims experts can help you navigate these factors and maximise your compensation. Find out why you need a finance claims expert on your side. 

 

Conclusion: Maximising Your Car Finance Compensation

Reclaiming compensation for mis-sold car finance can be a complex process, but with the right approach, you can recover the money you’re owed. By understanding how compensation is calculated and what factors can influence your claim, you’ll be better prepared to navigate the process. 

If you believe you’ve been mis-sold a car finance agreement, don’t wait—start the reclaim process today. Use our free car finance check to determine your eligibility and let our team of experts guide you through every step to ensure you receive the compensation you deserve. 

Start Your Car Finance Compensation Claim Now