Mis-sold car finance average payout: how much could you get?

The Sun

15-07-2025

LATER this month the UK supreme court is expected to rule on whether car finance dealers unlawfully charged millions of drivers secret commission.
This means if you took out a car finance arrangement before 2021 you could be in line for compensation.
In the build up to the ruling, the Financial Conduct Authority (FCA), the industry watchdog, is reviewing how it would implement a large-scale redress scheme.
Lloyds Bank, meanwhile, have set aside £1.2 billion in potential compensation costs – with other lenders following suit.
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What are mis-sold car finance claims?
Most cars in the UK are bought on a finance agreement, like a Hire Purchase (HP) or Personal Contract Purchase (PCP) agreement.
Before being outlawed in 2021, these agreements could be sold with 'discretionary commission'. This meant your finance provider was allowed to increase your interest rate and pocket the difference as commission.
Drivers didn't know that they could have paid for a cheaper loan and that part of their monthly repayments were funding this commission structure.
What is the average payout for mis-sold car finance?
Until the matter is resolved in court, the exact compensation drivers can expect remains unclear.
However, we do know the average driver could be due thousands. My Claim Group, a claims management company, estimates that the average driver could receive up to £4,000**.
Separate information from the FCA also found that a £10,000 finance agreement on PCP or HP could have cost the average consumer £1,100 in additional interest charges.
This information will likely play a role in calculating the compensation you will receive, alongside a few other factors.
What factors could affect my car finance mis-selling payout?
A few individual factors will likely influence your car finance payout. This includes:
The interest rate you received
The discretionary interest charged might differ depending on your lender. A higher rate means you may have paid more in commission to your dealer, and this could mean you're due an increased payout.
The length of the agreement
When purchasing on finance, the length of the repayment period affects borrowing costs.
Longer repayment periods typically mean lower monthly payments but higher overall borrowing costs. Shorter repayment periods, on the other hand, result in higher monthly payments but lower total costs.
So, repayment plans can influence the total interest paid on your finance. A longer repayment period at a higher rate could mean you paid more in unfair commission.
The size of the loan
In addition to the length of the agreement, the size of the loan also plays a role in determining the total interest paid.
A larger loan charged at a higher rate means you could have paid more in discretionary commission.
Can I make multiple claims to increase my payout?
Discretionary commission arrangements were commonly used before their ban in 2021. During this time, drivers may have entered into multiple finance agreements, each with its own hidden commission.
This means you might be eligible to make multiple claims and receive multiple payouts.
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How to apply for compensation
You do not need to use a claims management company to make a complaint, you can do it directly via your lender and eventually the Financial Ombudsmen Service.
My Claim Group work with a panel of solicitors and they work on a no win no fee***. This does mean if it's successful then they will take a cut of your total payout but you don't have to deal with the administrative hassle of claiming.
The Law Firms they work with take between 18 % and 36% inc VAT of successful claims.
The total amount you would be due to pay depends on the level of redress you have received.
My Claim Group is a trading name of the Claims Protection Agency Ltd, authorised and regulated by the Financial Conduct Authority (FCA No. 836470).
*My Claim Group will undertake a free check at no cost to you on your behalf to assess if you may have a vehicle finance claim.
**See link for the FCA reference, solicitor fee tables & average valuations: https://myclaimgroup.co.uk/dca
*** If you proceed, our panel solicitors work on a no win, no fee basis (subject to exclusions, for full details click on: https://myclaimgroup.co.uk/no-win-no-fee). Solicitor fees are up to 36% inc VAT. We receive a fee after a successful payout or a referral fee from your solicitor and this does not affect the compensation you will receive. You do not need to use a claims management company to make a claim; you can do this yourself for free by contacting the car dealership or finance provider and if that is not successful you can complain to the Financial Ombudsman Service.