Martin Lewis' MSE alerts on possible car finance refunds: Check if you're eligible

The finance guru's website has warned that car buyers who took out finance between 2007 and 2021 may be able to make a claim for 'mis-sold' car finance - this includes cars, vans, campervans and motorbikes

Martin Lewis' MoneySavingExpert (MSE) has issued a fresh warning about 'mis-sold' car finance, suggesting that vehicle owners could be owed more than £1,000. This primarily concerns anyone who purchased a car, van, campervan or motorbike between April 2007 and January 28, 2021.

The alert follows the Financial Conduct Authority's (FCA) decision to launch an investigation into car financing earlier this year, assessing whether customers have been overcharged on interest for loans. Despite the next update not being due until May 2025, vehicle owners can still lodge a complaint claim today - but they need to act swiftly.

"Our car finance reclaiming guide takes you through it step-by-step, but in a nutshell, you may be able to claim £1,000s back due to HIDDEN Discretionary Commission Arrangements (DCAs) on your policy," MSE wrote. "These DCAs are where finance firms let car dealers pump up interest rates, without customers being told, and then bunged 'em extra commission if they did. This likely meant many OVERPAID WITHOUT KNOWING and may be due a predicted average £1,100 back."

If you're unsure whether a DCA was included in your policy, there's no need to worry. The complaints procedure only considers two types of finance taken over the 14-year period.

This includes Personal Contract Purchase (PCP) and Hire Purchase (HP), but leasing is not covered, reports the Mirror. Experts note that only vehicles used for personal purposes and commuting qualify, excluding business vehicles and static caravans. Claims can be made on behalf of someone who has passed away or for a vehicle no longer in one's possession.

Those who believe they meet the criteria can use MSE's simple online tool to ask their finance firm if a policy utilised a DCA. If the answer is yes, it will automatically log a formal complaint.

MSE reports that 74% of users have discovered they had a DCA. However, potential claimants are advised to act quickly, as an update in May 2025 may introduce a 'time bar', limiting claims after a certain period.

FCA also explains: "Before January 2021, some lenders allowed brokers (the person that arranges your loan, for example, your car dealer) to adjust the interest rates they offered customers for car finance.

"The higher the interest rate, the more commission the broker received. This was known as a discretionary commission arrangement (DCA). And it may have been applied to your loan without you knowing.

"DCAs created an incentive for brokers to increase how much people were charged for their car loan. We banned this practice in 2021. But there have since been a high number of complaints from customers about how much they were charged before the ban. Providers are rejecting most of these complaints, because they believe they haven’t acted unfairly and haven’t caused customers to lose out.

"We’re reviewing the issue to make sure that, if you're owed compensation, you get it in the best way possible."

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