What Is a PCP Claim and Why You Might Be Owed Thousands

If you’ve had a car on finance at any point between 2007 and 2021, there’s a good chance you could be owed money. Not from a dodgy scheme or a too-good-to-be-true offer — but from one of the biggest financial mis-selling scandals in British history.

This is the story of PCP claims, and why millions of ordinary UK consumers are now entitled to claim back thousands of pounds.

What Is PCP Finance?

PCP stands for Personal Contract Purchase. It’s a type of car finance that became enormously popular in the UK over the past two decades, and it’s still how most people finance new cars today.

Under a PCP agreement, you typically pay a deposit, make monthly payments over 2–4 years, and then at the end of the term you have three options: hand the car back, make a final “balloon payment” to own it outright, or trade it in against a new car.

PCP became popular because the monthly payments are typically lower than a traditional hire purchase (HP) loan — because you’re only financing the depreciation of the car during your term, not its full value.

What Is the Problem With PCP?

The problem isn’t with PCP itself. It’s with how many PCP agreements were sold.

When you arranged car finance at a dealership, the dealer acted as a “credit broker” — essentially finding a lender on your behalf. The lender paid the dealer a commission for arranging the finance. Again, perfectly normal in financial services.

The problem was how that commission was calculated. Many lenders used what the regulator calls “discretionary commission arrangements” or DCAs. Under a DCA, the dealer had the power to set your interest rate within a range set by the lender. Here’s the crucial bit: the higher the interest rate the dealer set, the bigger the commission they received.

Think about what that means. The salesperson helping you choose your finance was financially incentivised to charge you the highest interest rate they could. And in most cases, they never told you this was happening. You sat across the table from someone you trusted to act in your interests, not knowing that they were earning more money for every extra percentage point of interest they added to your loan.

What Did the regulator Do About It?

The financial regulator investigated this practice and found it to be widespread across the motor finance industry. Their conclusions were stark: DCAs created a significant conflict of interest, and consumers had been harmed as a result.

In January 2021, the regulator banned discretionary commission arrangements entirely. The ban was a clear acknowledgement that DCAs had been harmful to consumers.

But banning the practice going forward left a huge question unanswered: what about all the consumers who had already been overcharged? That’s where PCP claims come in.

The regulator’s Motor Finance Review

In January 2024, the regulator launched a formal review into historic DCAs. The regulator confirmed it had found evidence of potential harm to consumers across the motor finance market and began a process to deliver a fair, consistent outcome for affected customers.

The regulator took the unusual step of pausing the standard 8-week complaint response window for lenders — essentially putting a temporary freeze on individual complaints while it worked out the bigger picture.

Then, in October 2024, the Court of Appeal delivered a landmark ruling in three joined cases. The judges found that where a car dealer received a commission from a lender without properly disclosing this to the customer, the arrangement was unlawful. The lenders in those cases were ordered to pay compensation.

The Supreme Court is expected to hear the case and deliver a final, definitive ruling. Most legal observers expect the Supreme Court to uphold the Court of Appeal’s findings, opening the door to billions of pounds in consumer compensation.

How Much Could You Be Owed?

The amount varies depending on your specific finance agreement — how long it ran, what interest rate you were charged, and how much the hidden commission inflated that rate.

Individual claims have been estimated to range from a few hundred pounds up to several thousand. The average claim is typically estimated at around £1,000–£2,000, though more complex cases — involving higher-value vehicles, longer terms, or multiple agreements — can be significantly more.

Some independent analysts have estimated the total liability for lenders across all affected agreements could run to £30 billion or more. That’s a significant sum, spread across millions of consumers.

Who Is Eligible to Make a PCP Claim?

You may be eligible if:

• You had a PCP (Personal Contract Purchase) or HP (Hire Purchase) car finance agreement in the UK
• The agreement was taken out between approximately April 2007 and January 2021
• The finance was arranged through a car dealership (not directly with a bank)
• You were a UK resident at the time

Importantly, you don’t need to still have the car. You don’t need to still be paying the finance. Even if your agreement has ended, or the car has been returned, you can still potentially make a claim for the mis-sold commission.

You also don’t need any paperwork. Our regulated partners can trace your finance agreements using your personal details — even if you’ve moved house or have no records of the original agreement.

How Do I Make a PCP Claim?

The process through Cash Me Up is straightforward:

1. Fill in our short form — takes about 2 minutes. We ask for your basic personal details and some information about your finance history.

2. Our regulated partner contacts you — usually within 24 hours. They review your case, trace your finance agreements if needed, and explain the process.

3. They submit your claim — your partner drafts and submits formal complaints to the relevant lenders on your behalf. You don’t need to do anything.

4. You get paid — if your claim is successful, the compensation goes directly to you. The claims company takes their agreed success fee. Cash Me Up charges you nothing at any stage.

Is There a Time Limit?

Normally, financial complaints must be submitted within 6 years of the event, or 3 years from when you became aware of the issue. The regulator’s review has complicated the timeline somewhat, but the general advice is: don’t wait. The earlier you submit your claim, the better your position.

The Bottom Line

If you had car finance between 2007 and 2021, you very likely had a DCA in place. You very likely paid more interest than you should have. And you very likely have a valid claim for compensation.

The best thing you can do right now is check your eligibility. It costs nothing. It takes 2 minutes. And you could be one step closer to getting back money that’s rightfully yours.

Start your free PCP claim check here →