What should I do if I owe compensation?

If you have used car finance to buy a vehicle at any time in the last 18 years, you may be in line for compensation.

This decides on the hidden commission in the recent court that the lenders paid to the dealers, who opens the door for possible payments for millions of people, if they are found incorrect-left finance.

If you are eligible, you are still a little waiting, and advice for now is not to sign up with a claim company that promises to help you prevent, as it will not speed up things and they will charge a fee.

But some other things keep in mind, if you are trying to work if you are likely to get compensation.

Most car buyers use motor finance, borrow money and pay Installments over time.

Car dealers almost always receive payments for their share in arranging loans – a commission.

But on Friday, a Supreme Court verdict has established that some dealers have charged a lot, or the customers have not explained the allegations well well, and that those buyers should be compensated.

The key is whether customers were considered “fair”, although the regulator, the financial conduct authority, is still actually acting.

A specific group of buyers who are likely to be eligible are people who took car loans, including discretionary commissioning (DCAS). He was banned in 2021, but before lenders took car dealers to charge high interest and earn a percentage as a commission. Customers who had DCAS and resulted in overcharged are likely to have claims.

If you still have your contract, you can check the terms and conditions.

The Supreme Court ruled in a test case that a car buyer Marcus Johnson should be entitled to compensation, establishing a reference point for future cases.

Mr. Johnson told the court that he was presented with “a large amount of paperwork”. He did not read and signed all this, relying on the sales representative to talk to him through the deal.

But 55% interest he was paying on the car, which was the commission, which the judge considered unfair.

Any person paying commission at that level is likely to be eligible for compensation, but it has been observed how low rates will have to be counted to count as fair, executing a customer out of the right to compensation.

The judge also mentioned Mr. Johnson’s lack of “sophistication”, when it came into financial matters. He was a young driver who had little experience.

Most of us feel slightly bamboz by a car showroom, with a hard-cell strategy and unfamiliar jargon, Danny Hevson, the leading financial analysis in AJ Bell, explains Danny Hevson, who is wondering if he claims for any of the three cars purchased on finance.

“It feels incredibly pressure,” she says. And most people do not fully understand the deal that they are sign up, which often involves “balloon pay”, which loads the payment back at the end of the contract.

“It will look unfair to many people,” she says. But just because you want to bring back some money you paid, it does not mean that you will get anything.

A part of this debate whether car buyers should be compensated whether customers gave “informed consent” for commission payment.

Details of any financial system including the Commission should be included in the terms and conditions. But how many of us read T&CS, especially if there is time pressure, and someone is hanging a set of keys of a new car in front of you?

Mr. Johnson admitted that he was not.

But the Supreme Court ruled that the major elements of the contract were not given enough prominence.

So even though all details – including commissioning arrangements – were in your contract, if they were not highlighted in a separate box or in bold, you may be eligible for compensation, Alex Neelil, Charity Consumer Voice’s co -founder Alex Neil says.

FCA is setting up a compensation scheme. In October, it will begin six weeks of consultation about how it should work, with the first payment in 2026.

So you can just wait until the plan is available.

Alternatively, FCA suggests Writing your lender to establish the facts of your own case.

Lenders should accept your complaint within eight weeks, and by presenting a complaint at this stage you may be indicated that how much you are likely to get any redressal, Ms. Neil said.

If you cannot remember that the lender’s name is included then the car dealership should be able to help you, she says.

Consumer groups and FCAs advise against signing up with a claim company. Many people are advertising their services online, but they cannot proceed with a claim until the FCA scheme has been set up and if they manage your case they will cut any compensation.

It is not yet clear how much compensation individual customers will be entitled to, although it is likely to be related to how much they were charged.

This will depend on the individual deal, including the type of car purchased.

According to the FCA, most of the claims are likely to be less than £ 950, including about 3% in annual interest.

Of course, those who have extracted several car finance deals in the last few decades may be entitled to more than one payout.