What is PCP mis-selling?

PCP mis-selling occurs when a Personal Contract Purchase agreement is sold without clear, fair and transparent information. This can involve undisclosed commission, discretionary interest rates, or an overemphasis on monthly payments.

Is PCP more likely to be mis-sold than other finance types?

PCP agreements are commonly associated with mis-selling concerns because customers often focus on monthly payments rather than the total cost of credit, making pricing and commission less visible.

Does PCP involve commission?

Yes. Many PCP agreements involve commission paid by the lender to the dealer. Problems arise when this commission is not clearly disclosed or influences the interest rate offered.

Can closed or settled PCP agreements be reviewed?

Yes. PCP agreements do not need to be active. Closed or settled agreements may still be reviewed depending on time limits and when the issue became apparent.

Does PCP mis-selling guarantee compensation?

No. Compensation is not guaranteed. Outcomes depend on individual circumstances and how the agreement was sold.

PCP Mis-Selling Explained

Personal Contract Purchase (PCP) is one of the most popular forms of car finance in the UK. It is also one of the most commonly linked to car finance mis-selling concerns.

Part of the complete guide: Car finance mis-selling explained →

What is PCP (Personal Contract Purchase)?

PCP is a type of car finance where you pay a deposit followed by monthly payments over a fixed term. At the end of the agreement, you usually have three options: return the car, pay a final balloon payment to own it, or replace it with another vehicle.

Because PCP emphasises monthly affordability, the total cost of credit can be less obvious at the point of sale.

How PCP agreements are typically sold

PCP agreements are often sold at dealerships with a strong focus on monthly payments rather than APR or total repayable amount.

Customers may be told the deal is “standard” or “the best available”, without being informed that the interest rate could be influenced.

Why PCP is commonly linked to mis-selling

PCP agreements are commonly linked to mis-selling concerns because:

Customers focus on monthly payments
Total cost of credit is less prominent
Interest rates can be discretionary
Commission incentives may exist

PCP and hidden commission

Many PCP agreements involved commission paid by the lender to the dealer. Problems arise when customers were not told that commission existed or that it could influence the interest rate.

Related: Hidden commission explained →

PCP and Discretionary Commission Models

Some PCP agreements were linked to Discretionary Commission Models (DCMs), allowing dealers to increase interest rates and earn more commission.

Does PCP mis-selling mean something went wrong?

Not necessarily. Mis-selling depends on how the agreement was sold and what information was provided at the time.

Understanding PCP mis-selling helps explain why some agreements are now being reviewed.

Next step: How to complain about car finance mis-selling →