If a car you bought on finance turns out to be faulty, your rights are just as strong as if you’d paid cash, and in some ways stronger. With hire purchase and PCP, the finance company legally supplies the car, so it shares responsibility for its quality. That means you can complain to the finance company, not just the dealer. This guide explains your rights and how to use them.
In short
With HP or PCP, the finance company supplied the car, so it’s responsible if the car wasn’t of satisfactory quality. Within 30 days, you can usually reject the car and end the agreement. After that, you’re usually entitled to a repair or replacement first, and if that fails, to reject the car or get a price reduction. If the finance company doesn’t put things right, you can complain to the Financial Ombudsman for free.
Who is responsible?
With hire purchase and PCP, the finance company owns the car and supplies it to you. Under the Consumer Rights Act 2015, it’s responsible for making sure the car is:
- of satisfactory quality, taking into account its age, mileage and price
- as described
- fit for purpose
The Financial Ombudsman says a finance provider supplying a car under hire purchase “is responsible for the quality of the car that is supplied”.
A used car isn’t expected to be perfect. Normal wear and tear for its age and mileage doesn’t count as a fault. The question is whether a reasonable person would consider the car satisfactory for its price, age and mileage when it was supplied.
If you paid using a personal loan arranged by the dealer, or paid at least part of the price by credit card, section 75 of the Consumer Credit Act may make the lender jointly responsible with the dealer.
Your rights depend on timing
| When the fault appears | What you can usually do |
|---|---|
| Within 30 days | Reject the car, end the finance agreement and get your money back |
| Within 6 months | Ask for a repair or replacement. The fault is assumed to have been there at the start unless the supplier can prove otherwise |
| After one failed repair or replacement | Reject the car for a refund, or keep it with a price reduction |
| After 6 months | The same remedies, but you may need to show the fault was there when the car was supplied |
The 30-day short-term right to reject starts the day after you take delivery (Consumer Rights Act, section 22). If you reject the car after a failed repair, the refund for a car can be reduced to reflect the use you’ve had of it, even within the first six months (section 24).
You generally have up to six years (five in Scotland) to make a claim, but the longer you wait, the harder it is to show the fault was there from the start.
What to do step by step
- Stop driving the car if it’s unsafe, and keep records of everything: dates, mileage, photos, videos and warning lights.
- Tell the finance company and the dealer in writing as soon as you find the fault. Say clearly what you want: rejection, repair or replacement. If you’re within 30 days, say you’re exercising your short-term right to reject.
- Get evidence. An independent inspection report from a qualified engineer can be very helpful, especially after six months.
- Keep paying your finance payments while the complaint is open, unless the finance company agrees otherwise. Stopping can harm your credit file and lead to a default.
- Let the supplier try one repair if you’re past 30 days. Keep copies of job cards and invoices.
- Complain formally to the finance company if it isn’t resolved. It has eight weeks to send a final response.
- Go to the Financial Ombudsman Service if you’re unhappy with the response or haven’t had one within eight weeks. It’s free.
Important
Don’t get the car repaired at another garage without agreeing it with the finance company first, unless it’s an emergency. You might not get the cost back, and it can make it harder to prove the original fault.
What the Ombudsman can do
If the Ombudsman agrees the car wasn’t of satisfactory quality, it can ask the finance company to repair the car, replace it, reduce the price, or let you hand the car back and end the agreement. It may also ask the finance company to refund some payments if you couldn’t use the car, pay compensation for distress and inconvenience, or cover reasonable costs such as an inspection report.
Rejecting a car on finance
If you reject the car, the finance agreement ends and the car goes back to the finance company. You should usually get back your deposit (including any part-exchange value), and a refund of some or all of your monthly payments, depending on how much use you’ve had of the car. Any money you owe is cleared, and the agreement shouldn’t be recorded as a default.
This is different from voluntary termination or handing the car back at the end of a PCP, which are ways to end an agreement when there’s nothing wrong with the car.
Faulty car on finance FAQs
Can I reject a car on finance?
Yes. Within 30 days of delivery you can usually reject the car if it has a fault that makes it of unsatisfactory quality. After that, you can usually reject it if one repair or replacement has failed.
Who do I complain to, the dealer or the finance company?
With HP or PCP, the finance company is legally responsible for the car’s quality, so complain to them. It’s sensible to tell the dealer too, as the dealer often carries out repairs.
Should I stop paying my car finance if the car is faulty?
No, keep paying while your complaint is open, unless the finance company agrees otherwise. Stopping can lead to missed payments on your credit file.
Does this apply to used cars?
Yes, but a used car is judged by its age, mileage and price. Normal wear and tear isn’t a fault. A serious fault soon after you buy it may still mean the car wasn’t of satisfactory quality.
Does this apply to leased cars?
Yes. The Consumer Rights Act also covers goods supplied on hire, so the leasing company is responsible for the quality of the car.