Drive a hard bargain

FIVE-MINUTE GUIDE TO... CHOOSING MOTOR FINANCE

- By Harvey Jones

MILLIONS of drivers could be in line for compensation over mis-sold car finance, following a watchdog investigation into shady commission practices.

If you bought a car, van or motorbike on Hire Purchase or Personal Contract Purchase before January 28, 2021, you might be owed thousands.

The Financial Conduct Authority (FCA) uncovered that brokers and car dealers were ramping up interest rates to boost their commissions, without the buyer knowing.

This practice, known as a discretionary commission arrangement, was banned in 2021, and the FCA is drawing up a redress scheme for those affected.

As FCA scrutiny increases, so should your own. With more than two million cars bought on finance every year, buyers need to understand what they’re signing up for, especially if it is their first time.

Greg Wilson, chief executive of car finance comparison site Quotezone.co.uk, said the rules of motor finance have changed, but the risks haven’t vanished.