What is a PCP claim?
A PCP claim is a complaint about how your car finance agreement was sold, not a guarantee that you're owed compensation.
It's mainly about the commission the dealer or broker earned for arranging your finance, and whether that was properly explained to you.
You can complain to your lender yourself for free, or Claim-Smart can help you check your agreement and manage the process.
PCP car finance claims have been all over the news for the past couple of years, and it's easy to hear the phrase without knowing what it actually means for you.
If you had a car on finance at any point and you're wondering whether it applies to your situation, this guide explains what a PCP claim is, what it's based on and what you can do next.
What is a PCP claim?
A PCP claim is a formal complaint that your Personal Contract Purchase (or Hire Purchase) car finance agreement wasn't sold fairly, usually because of commission that wasn't properly explained to you.
It isn't the same as being told you're automatically owed money. A claim is investigated by your lender, and if you disagree with their decision, you can take it to the Financial Ombudsman. Compensation only follows if the agreement is found to have been mis-sold.
Most PCP claims come down to commission arrangements between the dealer and the finance company, and whether you were told enough about how that commission affected the deal you were offered.
What is a PCP agreement?
A PCP, or Personal Contract Purchase, is one of the most common ways to buy a car on finance in the UK.
You usually pay a deposit, then fixed monthly payments for a set term, normally two to four years. At the end, you can hand the car back, trade it in, or pay a final 'balloon payment' to keep it.
Because the dealer often arranged the finance on the lender's behalf, they were sometimes paid commission for setting it up. This is where most PCP claims come from.
Why might my PCP agreement be worth a claim?
Your PCP agreement could be worth a claim if the dealer or broker received commission for arranging your finance that wasn't properly disclosed to you.
In some cases, dealers could change your interest rate, and the higher the rate, the more commission they earned. If you weren't told this was happening, it may have affected how much you paid without you realising.
This isn't the only reason an agreement can be mis-sold, but it's the most common one behind PCP claims. You can read more about how commission affects eligibility here.
Am I eligible to make a PCP claim?
You could be eligible if you took out a PCP or Hire Purchase agreement for personal use between 6 April 2007 and 1 November 2024.
The agreement needs to be a genuine finance arrangement, so Personal Contract Hire (PCH), which is a lease rather than finance, isn't included. 0% interest agreements are excluded too, since there's no interest rate for commission to have affected.
If you're not sure whether your agreement falls within these dates, Claim-Smart can help you check. Get in touch to find out more.
Does it matter if I no longer own the car or have already paid it off?
No, neither of these affects your eligibility. A PCP claim looks at how the finance agreement was sold, not what happened to the car afterwards or whether it's still being paid off.
So if you've sold the car, traded it in, or finished paying the agreement years ago, you may still be able to claim.
How much compensation could I get?
How much you could receive depends on the commission paid on your agreement and how much it affected your interest rate.
The FCA currently estimates the average payout at around £829 per eligible agreement, though this is only an estimate and every case is different. Some people may receive more, others less, and compensation is capped in some cases.
What's happening with the FCA scheme right now?
Parts of the FCA's motor finance redress scheme are currently suspended while legal challenges are heard by the Upper Tribunal, with the case expected to be heard in December 2026 or February 2027.
This means lenders don't currently have to calculate or pay compensation under the suspended parts of the scheme, although they're still expected to keep reviewing complaints. If you haven't complained yet, you can still do so, and the current deadline for making a complaint yourself is 31 August 2027.
Do I need to use a claims management company to make a PCP claim?
No, you don't need to use a claims management company. You can complain directly to your lender yourself, and it costs nothing to do so.
Some people choose to use a company like Claim-Smart anyway, usually because they don't know who their lender was, no longer have their paperwork, or would rather have someone else manage the correspondence.
Not having your paperwork is pretty common and doesn't stop you from claiming.
How do I make a PCP claim?
To make a PCP claim, you'll need to work out who your lender was, gather what information you can, and submit a complaint explaining why you think the agreement may have been mis-sold.
You don't need your full paperwork to get started. Your name, address and a rough date can often be enough for a lender to find your agreement.
Find out what details you'll need to start a claim, or read our step-by-step guide to making a complaint.
If you'd rather not manage the process yourself, Claim-Smart can submit your complaint and keep you updated as it progresses.
So, what is a PCP claim?
A PCP claim is a complaint about how your car finance agreement was sold, based on whether commission was properly disclosed, not a guarantee that you're owed money.
You can be eligible whether or not you still own the car, and whether or not the agreement has been paid off, as long as it falls between 6 April 2007 and 1 November 2024.
You can complain to your lender for free, or if you'd like some support working out whether your agreement could be worth investigating, Claim-Smart can help. Simply fill in our form and we’ll get back to you as quickly as possible.
*Please see our terms and conditions for our fee structure and cancellation terms.
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