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 recently takes the decision of a court to the Hidden Commission given by the lenders to the dealers, which opens the door for possible payment for millions, if they are found to be miss-bed 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 where they borrow money and pay in installments over time. In some cases, the drivers finally pay the monthly fee before paying the so -called “balloon payment”.

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 working on what it would mean.

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.

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

The Supreme Court ruled in a test case that Marcus Johnson should be entitled to compensation, determining a reference point for future matters.

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 what he was paying for the car was 55% commission.

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.

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, Charity Consumer Voice suggests writing to its lender to establish the facts of its own case.

Co-founder Alex Neil said that lenders should accept your complaint within eight weeks, and by presenting a complaint at this level you may indicate how much you are likely to get any prevention.

If you cannot remember that the car dealership included the lender’s name should be able to help you.

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.

A lot will probably depend on individual deals, including the types of cars 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 pay more than one.