For many drivers across the UK, personal contract purchase (PCP) has become the go-to option when it comes to financing a car. It offers manageable monthly payments, the chance to drive a newer vehicle more frequently, and a sense of flexibility that appeals to those who don’t necessarily want to commit to car ownership long-term.
But as car finance agreements come under greater scrutiny, questions are emerging about how much information customers were actually given before signing on the dotted line. Were the key terms explained clearly? Were the risks spelled out? And crucially, are people paying more than they should?
This article takes a closer look at the hidden pitfalls of PCP finance and why more drivers are starting to take a second look at their contracts.
Table of Contents
Understanding the Basics: What Is PCP Finance?
A PCP agreement is a type of car finance that lets you pay for the use of a vehicle rather than its full value. You make an initial deposit followed by monthly payments for a fixed term. At the end of the agreement, you have the option to return the car, trade it in for a new deal, or buy it outright through a final “balloon payment.”
On the surface, this can seem like a practical, flexible solution. But many drivers have entered into these agreements without fully understanding the long-term financial implications.
Where Things Get Complicated
Unlike a traditional hire purchase or personal loan, PCP deals involve several moving parts. And with that complexity comes the potential for confusion — or worse, mis-selling.
Here are just a few areas where drivers may not have received the full picture:
- Balloon payments: The final payment needed to own the car can be much larger than expected. Many people reach the end of their agreement unprepared for this cost.
- Mileage limits: Most PCP contracts include an annual mileage cap. Go over it, and you’ll face excess charges that can be steep.
- Condition requirements: Handing the car back? Be aware that anything beyond normal wear and tear could lead to extra costs.
- Undisclosed commissions: In some cases, salespeople or brokers received higher commissions for arranging deals with more expensive interest rates — something not always disclosed to customers.
These issues are now prompting a wave of consumer concern, particularly where deals may not have been explained properly from the start.
Have You Been Given the Right Information?
The Financial Conduct Authority has previously noted that some drivers may not have been given all the information they needed to make an informed decision. In particular, there’s concern that some people entered into PCP agreements believing they had little choice or thinking they were being offered the best available rate — without being told the dealer had discretion over that rate and could increase it to earn more commission.
For drivers who feel they were misled or not informed about key terms, the good news is that PCP claims are valid for agreements signed between 2007 and 2021. If you took out a PCP finance deal during this period and were not made aware of the full terms or were pushed into a plan that wasn’t right for your circumstances, you may have grounds for a claim.
The Rise of PCP Claims and Their Significance
More people are now coming forward to review their car finance contracts. Some are discovering for the first time that they were paying over the odds — not because of their creditworthiness or borrowing risk, but because of undisclosed commissions baked into their deal.
These reviews have led to an increase in PCP claims, as drivers challenge the fairness of the agreements they were sold. This isn’t just about recouping money. It’s also about pushing for a more transparent and responsible finance market where consumers are treated fairly.
Spotting the Red Flags in Your PCP Agreement
Not sure if your deal might have been unfair? Look out for the following signs:
- You weren’t made aware that your interest rate could be increased by the dealer or broker.
- The optional final payment wasn’t clearly explained or factored into your budget.
- You were encouraged to accept the deal quickly without being shown other finance options.
- Your contract feels more expensive than expected, even if you’ve maintained payments on time.
If any of these ring true, it could be worth reviewing your agreement more closely.
What About Black Horse Finance Claims?
Some drivers are now specifically pursuing Black Horse Finance Claims, where questions have been raised about how certain car finance deals were structured. In some cases, customers say they weren’t told about interest rate discretion or how commission arrangements worked.
These types of claims fall into the broader picture of concern over how PCP deals were explained — or not explained — to everyday drivers. If you feel that you weren’t treated fairly or were left in the dark about key terms, you’re not alone.
How to Protect Yourself Going Forward
Whether you’re already in a PCP deal or thinking about entering one, it pays to be cautious and well-informed. Here are a few things to keep in mind:
- Ask questions: Don’t be afraid to ask the dealer to explain the terms clearly, including how commissions work.
- Read everything: Go through the contract carefully and take your time before signing.
- Compare your options: Look at other types of car finance — such as hire purchase or personal loans — to see which truly suits your needs.
- Watch out for upselling: Be mindful if you’re being encouraged to add on extras or pushed into a deal without full information.
Final Thoughts: It’s Time for Clarity
As the spotlight continues to shine on mis-sold car finance, it’s becoming clearer that many drivers were left in the dark. Whether it’s through Black Horse Finance Claims or broader PCP claims, consumers are now taking steps to challenge what they feel were unfair agreements.
What this all points to is a need for greater transparency in how car finance is explained and sold. Drivers deserve to know exactly what they’re signing up for, what it will cost them, and what their options truly are.
If you’ve ever walked away from a dealership feeling uncertain, or if your monthly payments don’t add up to what you expected, now might be the right time to take a second look. The right information — and the right support — could help you better understand your options and protect your finances in the future.
