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Most car buyers use motor finance, borrowing money and paying in instalments over time.
Car dealers almost always receive a payment for their part in arranging the loan – a commission.
A Supreme Court ruled that many of these commission payments were legal, but in certain circumstances the failure by dealers to properly disclose details of the charges could be unfair and therefore unlawful.
The ruling narrowed the scope of redress set by lower courts, which would have allowed claims for compensation from many more car buyers.
The key is whether customers were treated “fairly”, although the regulator, the Financial Conduct Authority (FCA), is still working on exactly what that will mean.
One specific group of buyers who are likely to be eligible are people who took out car loans that included discretionary commission arrangements (DCAs). They were banned in 2021 but prior to that lenders gave car dealers leeway to charge higher interest and earn a percentage of that as commission. Customers who had DCAs and were overcharged as a result are likely to have a claim.
If you still have your contract you can check the terms and conditions.
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