What to Do If You’re Not Happy With a Car on Finance

If your financed car is falling short

Not every car finance journey feels smooth. Maybe the car has persistent faults, the interest seems higher than expected, or you later learned a broker or dealer earned a commission you were never told about. In the UK, clear consumer protections exist across product quality and finance conduct. Knowing which route to take will help you fix faults, reduce costs, or seek redress without unnecessary stress.

Here is the context that matters now. The FCA is lifting the pause on motor finance complaints on 31 May 2026 to roll out a redress scheme that addresses unfair commission arrangements and disclosure failings. It follows a period where complaints were held back to avoid inconsistent outcomes while the regulator tested the evidence. The numbers are significant. Millions of agreements could be in scope, with average redress often cited in the hundreds of pounds per agreement and a potential multi-billion industry bill. Most UK new cars are financed, which is why this matters for everyday motorists.

If you are unhappy with the car itself, the Consumer Rights Act still applies. Within 30 days of purchase you can reject a faulty car outright. After that, you should be offered a repair or replacement, and only if that fails can you pursue a price reduction or final rejection. If your issue is the finance rather than the vehicle, different rules apply. Discretionary and non-discretionary commission complaints have specific windows for raising and escalating cases. The Financial Ombudsman Service provides an independent route if you are not satisfied with the firm’s final response.

You do not need to become a legal expert to get started. Focus on evidence: your agreement, APR, commission disclosures, emails, dealer notes, diagnostics and repair invoices. Clear documentation is the simplest way to secure a fair outcome.

A clear paper trail is your strongest bargaining chip.

One final point: court is rarely the quickest answer. Many consumers prefer regulator-led routes because they are simpler and lower risk. As timelines reopen, being prepared will put you at the front of the queue.

Who should use this guidance

This guidance is for UK motorists with hire purchase or PCP agreements who are unhappy with their vehicle’s condition, monthly cost, interest rate, or the way commission was handled. It is particularly relevant if your finance started before 28 January 2021, when discretionary commission models were still common. It also helps if you raised a complaint during the regulator’s pause and are unsure what happens next. Whether you plan to keep the car, hand it back, or challenge the finance terms, the steps below outline practical, time-bound routes that protect your position and keep options open.

Your practical choices now

1. Ask the dealer for a repair or replacement under the Consumer Rights Act.

2. Negotiate a partial refund or final rejection if faults persist after repair.

3. Make a formal complaint about hidden or unfair commission to the lender or broker.

4. Escalate to the Financial Ombudsman Service if you are unhappy with the response.

5. Prepare for the FCA redress scheme opening after 31 May 2026.

6. Explore voluntary termination or settlement if affordability is the issue.

7. Refinance to a better-rate product once issues are settled.

What it might cost and what it could deliver

Short, well-evidenced complaints tend to move faster.

Do you qualify for redress or fixes?

Eligibility depends on what went wrong and when. If your dispute is about the car’s quality, the Consumer Rights Act gives you a short-term right to reject within 30 days if the car is faulty, then a right to a repair or replacement, and ultimately a price reduction or final rejection if the problem persists. Keep service records and diagnostics to demonstrate the fault and any repeat failures.

If your concern is commission, timing is crucial. Discretionary commission arrangements were banned from 28 January 2021. For these pre-2021 cases, complaints should be made to dealers or finance providers within the window that runs up to 4 December 2025, with firms required to issue final responses by 29 January 2026. Customers then have until at least 29 July 2026 to refer unresolved cases to the Financial Ombudsman Service. For non-discretionary commission complaints, the current window also runs to 4 December 2025, with final response requirements staged from mid-2024 to January 2026.

The FCA will lift the complaint pause on 31 May 2026 to activate a structured redress scheme that aims to deliver consistent outcomes across the market. Most consumers prefer regulator-led routes over court because the process is simpler and lower risk. If you financed your car in the UK and suspect commission issues or disclosure gaps, gather your paperwork now so you are ready as timelines resume. Kandoo can help you understand your options and explore affordable next steps.

Step-by-step route to a fair outcome

1. Gather your agreement, statements, vehicle history and any emails.

2. Check dates to confirm if commission rules and windows apply.

3. Record faults with photos, diagnostics and repair invoices.

4. Complain in writing to the dealer or finance provider.

5. Ask for a final response within the required timeframe.

6. Escalate to the Financial Ombudsman if still unhappy.

7. Prepare for the FCA redress scheme opening in May 2026.

8. Consider settlement, VT or refinance once resolved.

Upsides and trade-offs at a glance

Before you commit, read this

Act within the correct windows. If you suspect an undisclosed or unfair commission on a pre-2021 agreement, submit your complaint to the dealer or lender before the current 4 December 2025 deadline. Keep copies of everything you send and receive, including any final response dates, because they control when you can go to the Financial Ombudsman. For vehicle faults, insist on written diagnostics and outcomes after each repair attempt. Avoid stopping payments unless advised, as it may harm your credit file and weaken your position. Do not rush to court if a regulator-led route can deliver the same or better result with less risk and no legal fees. Finally, if affordability is tight, ask for temporary forbearance and explore voluntary termination or a managed settlement only after you understand the costs and credit implications.

Alternatives if your situation changes

1. Seek a time-to-pay plan or temporary forbearance with your lender.

2. Use voluntary termination to end the agreement once thresholds are met.

3. Refinance to a lower rate after resolving disputes and clearing markers.

4. Sell or part-exchange only after confirming settlement and ownership position.

5. Debt advice via a free, regulated charity if payments are unmanageable.

FAQs

Q: What counts as a discretionary commission arrangement? A: It is where a broker or dealer could vary the interest rate and receive a higher commission for a higher APR. These were banned from 28 January 2021 but many historic agreements used them.

Q: Do I have to wait until May 2026 to complain? A: No. You can complain now within the current windows. The FCA will lift the pause on handling outcomes on 31 May 2026 as part of a redress scheme, which should streamline resolutions.

Q: How much compensation could I receive? A: Payouts vary by agreement. Market estimates often cite average redress in the hundreds of pounds per agreement, though individual outcomes depend on your loan size, rate and commission setup.

Q: Should I use the Financial Ombudsman or court? A: Most consumers prefer the Ombudsman or the FCA scheme because they are simpler and free for consumers. Court can be slower and carries cost risk if you lose.

Q: Will making a complaint affect my credit score? A: A complaint itself does not. Missed payments or voluntary termination markers can appear, so keep paying where possible and seek forbearance if you are struggling.

Q: Can I reject my car if it keeps breaking down? A: Yes, if faults persist after a repair attempt you may seek a price reduction or final rejection under the Consumer Rights Act. Evidence and timelines are essential.

How Kandoo can help

Kandoo is a UK-based retail finance broker. We help you understand your finance options, compare potential refinancing, and prepare the paperwork lenders expect. If you are weighing settlement, voluntary termination or a new agreement after redress, we can outline likely costs and affordability checks so you move with confidence. Speak to us for tailored, FCA-aware guidance and a practical action plan.

Important information

This article provides general information for UK consumers and is not financial or legal advice. Timelines and eligibility can change. Always confirm dates and requirements with your lender, the Financial Ombudsman Service and the FCA before taking action. If in doubt, seek regulated advice.