HP Car Finance Claims: What You Need to Know

Can you claim on an HP agreement?

Yes, Hire Purchase deals are covered by the same redress as PCP if they carried an undisclosed DCA, high-commission arrangement or contractual tie. Owning the car at the end doesn't change your right to complain.

What matters is whether the broker raised your APR to earn more commission, and whether that was explained to you, not whether it was HP or PCP. The scheme window runs from 6 April 2007 to 1 November 2024, where commission was payable to a broker.

Why HP deals can be affected

Many HP deals between 2007 and 2024 were arranged by commission-paid dealers and brokers. That's the setup where a discretionary commission arrangement could push up your APR.

HP finances the whole price of the car (you pay off the full amount plus interest over the term, then own it), so your APR still drove the broker's commission. If the broker raised it without telling you, you may have overpaid.

HP was especially common for used cars and for buyers who wanted to own the vehicle outright at the end. Because HP has no balloon payment, the monthly payment tends to be higher than on a PCP, but a DCA could still raise the APR on either product without you being told.

HP vs PCP under the scheme

Both products are covered by the same scheme rules. The table shows where they differ for a claim.

The eligibility test is identical. If your HP had a DCA, high-commission arrangement or undisclosed tie, you're in scope on the same basis as a PCP customer.

Were you affected? A checklist

Check the date, the route and the disclosure. The more boxes you tick, the more it's worth complaining.

A 0% HP deal or one arranged directly with a bank (no broker) is generally excluded, because there was no broker commission to distort your APR.

• Your HP agreement started between 6 April 2007 and 1 November 2024 (commission payable to a broker).
• It was arranged through a dealer or broker paid commission.
• Your interest rate could have been raised to earn more commission (a DCA), or a large commission applied.
• The commission was not clearly disclosed to you in a way the FCA accepts.

HP-specific questions

A few HP situations come up often. The scheme treats each one as set out below.

• You own the car outright: owning it doesn't weaken your claim, because the commission issue is separate from ownership.
• You settled the HP early: you can still claim. See sold the car.
• You used voluntary termination: having used a legal right doesn't stop a separate commission complaint.
• Your HP was for a used car: used-car HP is covered on the same basis as new.

How much and how to claim free

The scheme returns overpaid interest plus interest on top, so amounts vary by deal, and claiming is free. Complain to the lender first, then to the Financial Ombudsman Service if needed.

Claiming is free and you can do it yourself: complain to your lender first, then escalate to the Financial Ombudsman Service. You do not need a claims-management company taking a cut.

1. Estimate your HP claim with the compensation estimator, using your own APR, amount and term.
2. Follow how to claim to send your complaint to the lender first.
3. Take it to the Financial Ombudsman Service if the lender's answer doesn't settle it.

A worked HP example

On HP, the overpaid interest from a DCA depends on the amount borrowed, the size of the rate bump and the term. The example below shows the maths, for illustration only.

HP does not sit above PCP for the same rate bump: both charge interest on the amount borrowed, and a PCP's balloon keeps more of it outstanding for longer. Shorter HP terms (36 months) pull the figure down; longer terms (60 months) push it up. Work your own figure with the compensation estimator.

How HP's structure affects the figure

HP and PCP on the same car usually borrow a similar amount, but a PCP's balloon keeps more of it outstanding until the end, so the same rate bump tends to produce less overpaid interest on HP. The term and the size of the bump matter just as much.

On both HP and PCP you borrow the price minus your deposit. On HP you repay all of it over the term; on a PCP part of it (the balloon) stays outstanding until the end, so interest keeps running on a larger balance. A DCA that added 2 points to the APR on a £12,000, 48-month deal adds about £500 of interest on HP and about £660 on a PCP with a £4,800 balloon, all else equal.

Term length matters too: a longer HP means more months of overpaid interest. The only way to know your figure is to work it out from your own deal, and the compensation calculator does this for free.

Conditional sale and lease-to-own

Conditional sale and similar agreements are treated much like HP for these purposes, if they carried undisclosed commission. The scheme focuses on the commission, not the product name.

Conditional sale (CS) is a close cousin of HP: you pay instalments and take ownership at the end, with interest. If your CS agreement was arranged through a commission-paid broker between 2007 and 2024 and the commission was not properly disclosed, the same scheme logic applies.

If your credit agreement says "conditional sale" rather than "hire purchase", don't assume you're excluded: the eligibility test is the same.

HP and used cars

HP was the classic way to finance a used car, so many affected HP agreements are on used vehicles. Used-car HP is covered on the same basis as new.

Dealers arranged large volumes of used-car HP through commission-paid brokers during the window, and these can fall within the roughly 12.1 million agreements the FCA estimates are eligible. The eligibility test does not depend on the car being new.

Any figure you see is an estimate, not a promise. Nobody is guaranteed a payout, and the amount depends on your own agreement.