How to claim £700 owed to millions of UK drivers who've used car finance in last 18 years
Millions of Brits could be owed a payout of £700 if they've been on car finance at some point in the past 18 years.
The Financial Conduct Authority (FCA) has said that a whopping 14 million loans are eligible for compensation and that a total of £8.2 billion could be paid out, working out to an average of £700 per UK driver.
It found that car finance companies broke the law by failing to disclose important information which meant customers didn't have the chance to find a better deal and as a result ended up paying more.
FCA boss Nikhil Rathi said: "Many motor finance lenders did not comply with the law or the rules. Now we have legal clarity, it’s time their customers get fair compensation. Our scheme aims to be simple for people to use and lenders to implement.
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"We recognise that there will be a wide range of views on the scheme, its scope, timeframe and how compensation is calculated. On such a complex issue, not everyone will get everything they would like.
"But we want to work together on the best possible scheme and draw a line under this issue quickly. That certainty is vital, so a trusted motor finance market can continue to serve millions of families every year."
Around 44 percent of car finance deals signed between April 2007 and November 2024 will be eligible for some kind of compensation.
How to claim
As for how you're supposed to claim any money you're owed, they said you should start by getting in touch with your provider and have a template complaint letter you can use.
You should tell them who you are, your policy number, the date you made the agreement and the number plate of the car along with as many other useful details to help your case.
If you send in a letter of complaint you should hear back in the next few weeks whether you're eligible for some of the money, and if it's been several weeks then you can keep chasing them for a reply.
Most cars in the UK are bought on finance agreements where customers pay a deposit on their motor and then keep forking over monthly payments on the vehicle.
Some of these deals involved the dealer getting a commission from the lender based on the interest rate the customer paid, meaning drivers might have paid higher rates than they needed to.
In certain cases, the commission for the dealer was so high that 35 percent of the credit was going to them.
So if you bought a car on finance between April 2007 and November 2024 then you might as well send in a letter and see what you hear back.
Joe Harker