Don’t be greedy. If you liked your car finance deal, don’t make a claim

Yet again the finance industry is being rocked by a mis-selling scandal — and again it is linked to commission.
This time it is car loans. But it is starting to feel like this scandal has turned into a money-grabbing exercise.
The investigation into car finance mis-selling was initially focusing on drivers whose car dealer had increased their interest payments to earn a bigger kickback, charging something known a discretionary commission — a shameful practice that was banned in 2021. But the FCA last week said it will now look at all car finance deals that included commission, so many more motorists could be owed a payout.
But did all these people really get a rotten deal? Nobody forced anyone to keep buying ever newer and ever nicer cars. You rarely see an old banger on the roads these days, and that’s because finance for new cars is cheap, easily accessible and readily available.
This isn’t a commission scandal like others we’ve seen. This commission was linked to the sale of a car — a product used by the owner. I suspect that not many would have had the cash upfront to buy a brand new car.
Payment protection insurance was a worthless product flogged to simply make money. Same with credit card cover.
Mis-sold annuities, pensions, with-profits funds — and let’s not forget structured products — were all driven by salespeople’s desires to make vast sums by giving duff, and, for many, life-changingly bad advice.
That’s not the case here. People bought cars for a price they liked on deals that were good.
Car finance has become a big business — 84 per cent of new cars are bought on finance, according to the Finance and Leasing Association, a trade body. New lending was worth £51 billion in 2023 — up from £20 billion in 2008.
• Car finance compensation: what you need to know
With the scope of the regulator’s investigation now much wider, will we see millions of drivers claiming for compensation? And will this include all those drivers who were previously so pleased with their experience?
Unlike the PPI mis-selling scandal, which was paid for by the banks, not all car finance firms are big, and a huge redress scheme could bring the industry to its knees, meaning no more car finance.
You may not think that is such a bad thing. But consider the alternatives.
The obvious option is to buy a car outright. But we all know that any new car owner makes a massive loss the moment they drive off the forecourt.
Buy a used car, then. This was the route I chose. I got a second-hand car last summer — old enough to be affordable, but new enough not to cause too much trouble. Well, lo and behold, I had an engine fault on my way back from Wiltshire in August (much to the delight of my children, who were allowed to eat Ian Cowie’s favourite stock holding, McDonald’s, in the back of a tow truck). I now know a lot more about valves and spark plugs and my wallet is considerably lighter.
While it is right that the car finance industry should be held accountable for mis-selling, it is pure greed to jump on the claims bandwagon if you were happy with your deal. Just because you can make a claim, it doesn’t mean you should.
If you do, you might be quids in now, but remember that you will pay for it in the long run when you won’t be able to take out another finance deal for a shiny new car or you find that car prices have gone up even higher to cover that compensation bill.
And the real winners? Claims compensation firms, of course.@JohannaMNoble