Key takeaways
- On HP, PCP or conditional sale the finance company is the legal supplier of the car
- Section 75 covers credit cards and loans, not HP or PCP, and direct liability is stronger
- Write to the lender, give them 14 days, and the Ombudsman after 8 weeks
- You do not have to go through the dealer first
Bought your car on finance and discovered it's faulty? Here's something most dealers don't want you to know: on most car finance, the finance company – not the dealer – is the party legally responsible for the car's quality, and often easier to deal with. This is the heart of rejecting a car on finance.
Who actually sold you the car?
On Hire Purchase (HP), Personal Contract Purchase (PCP) and conditional sale, the dealer doesn't sell the car to you. The dealer sells it to the finance company, and the finance company supplies it to you under the credit agreement.
In plain English: the finance company is legally the trader you bought from. Under the Consumer Rights Act 2015, that makes them directly responsible for the car being of satisfactory quality, fit for purpose and as described. You don't need a special rule to drag them in – they've been on the hook from day one.
The dealer's promises count against the lender too
Under Section 56 of the Consumer Credit Act 1974, the dealer conducted the sale negotiations as the finance company's agent. Anything the dealer told you about the car – its history, condition or mileage – is treated as if the finance company said it. If those claims turn out to be false, the lender answers for the misrepresentation.
Where section 75 fits in
Section 75 of the Consumer Credit Act 1974 makes a credit provider "jointly and severally liable" for breaches of contract or misrepresentation by the supplier – but only where the lender and the supplier are different parties. That's why it covers credit cards (pay even part of the deposit by card and the card issuer is liable for the whole purchase, where the cash price is over £100 and up to £30,000) and dealer-arranged personal loans.
It does not apply to HP, PCP or conditional sale, because there the finance company is the supplier. That's not a gap in your protection – it's the opposite. Direct liability under the Consumer Rights Act is a stronger right than Section 75, not a weaker one. For the card-payment angle, see our Section 75 vs Chargeback guide.
Why claim against the finance company?
They are regulated. Lenders answer to the Financial Conduct Authority, which sets rules for how complaints are handled and how quickly. A dealer can go quiet; a regulated lender has eight weeks to give you a final answer, and the Financial Ombudsman after that.
The dealer listens to them. Lenders have ongoing relationships with the dealers they buy cars from, and a lender asking a dealer to take a car back carries more weight than a customer asking.
They stay liable if the dealer does not. If the dealer goes bust or simply refuses to engage, the lender's responsibility for the car is unchanged.
How to make your claim
Gather your evidence before contacting the finance company – your finance agreement, proof of the fault (photos, videos, diagnostic reports), all correspondence with the dealer, any repair attempts or invoices, and a clear timeline of events.
Write to the finance company formally (email is fine) including your account or agreement number, vehicle details, purchase date and price, a description of the fault, what you've already tried with the dealer, and what you want – whether that's a refund, repair, or compensation. Reference the right laws: the Consumer Rights Act 2015 (specifically satisfactory quality and fitness for purpose), Section 56 of the Consumer Credit Act 1974 if the dealer misled you, and – if you're claiming against a credit card issuer or loan provider – Section 75 of the Consumer Credit Act 1974.
Set a 14-day deadline for them to respond with a proposed resolution. If they reject your complaint, or 8 weeks pass without a final response, escalate to the Financial Ombudsman Service (FOS) – it's free to use and has real powers to order compensation.
Day 1
Complaint in writing
- Your rejection goes to the lender, not just the dealer
- Keep a copy and the date
Within 8 weeks
The lender’s final response
- A regulated lender has 8 weeks to answer
- Silence at 8 weeks counts as a refusal
Within 6 months after
The Financial Ombudsman
- Free, no court, decided on the paperwork
- Refer within 6 months of the final response
The 8 weeks and the 6 months come from the FCA’s complaint rules (DISP 1.6.2R and 2.8.2R). Voluntary termination needs none of this: it is your right under section 99, not something the lender grants.
The letter to the lender is the one that starts the clock, and it has to cite the right things: the Consumer Rights Act for the quality of the car, section 56 for anything the dealer told you, and the lender's own eight-week duty. The free check works out which of the three time windows you are in and writes the dealer letter and the lender letter from the same answers.
Or have the letter written from your answers.
- Enter your reg
- Get your verdict
- Reject your faulty car
Free · No card · About 2 minutes
What about voluntary termination?
If your car is on HP or PCP, you may also have the right to voluntarily terminate the agreement once you've paid 50% of the total amount payable. This is separate from any faulty-car claim and can be useful if you can't prove a fault, you just want out of the agreement, or the car's value has dropped significantly. The key difference is that voluntary termination means you walk away without getting money back, whereas rejecting a faulty car can get you a full refund of payments made plus compensation. Rejection and voluntary termination are two of the five ways to give a car back to the finance company; the guide sets out which applies to which situation.
Not sure which window you are in? Put in your reg and find out, free.
Common finance company excuses, and how to counter them
"You need to deal with the dealer first"
Wrong. On HP or PCP, the finance company is the party that supplied the car – your claim is against them. And where Section 75 applies (credit cards and dealer-arranged loans), it creates joint liability, so you can claim against either party. Either way, you're not required to pursue the dealer first.
"The fault isn't covered because..."
Your Consumer Rights Act rights can't be excluded or limited by the finance agreement. If the car wasn't of satisfactory quality, the finance company is liable.
"It's outside the time limit"
Claims for breach of contract can be made within 6 years. That's much longer than most people think.
"We're just the lender"
On HP or PCP, they're not just the lender – they're the legal supplier of the car. And under Section 56, the dealer negotiated the sale as their agent. That's the law.
What usually happens next
A lender's complaints team does not inspect cars itself. The usual sequence is: an acknowledgement within a few days; a request for your evidence and the dealer's account; often an independent inspection arranged and paid for by the lender; then a final response inside the eight weeks that either accepts the rejection and unwinds the agreement, offers a repair, or refuses. If the agreement is unwound, the car goes back, the deposit and the payments you have made come back (a deduction for use is possible after the first 30 days), and the agreement is closed with nothing adverse on your credit file.
The Financial Ombudsman
If the lender refuses, or eight weeks pass without a final response, you can take the complaint to the Financial Ombudsman Service within six months of their final answer. It is free, it decides on the paperwork without a hearing, and its decisions bind the lender once you accept them; the compensation limit is over £400,000, far above any car dispute. Lenders know this, which is why a complaint that cites the Act, the dates and the eight weeks is treated differently from a phone call.
The bottom line
If you bought on credit, you have powerful protection beyond your rights against the dealer alone. On HP, PCP or conditional sale, the finance company supplied your car and is directly responsible for its quality; if you paid by credit card or dealer-arranged loan, Section 75 makes the lender equally liable alongside the dealer. You don't have to pursue the dealer first, and the Financial Ombudsman provides a free, independent route to resolution if the finance company won't cooperate. Keep everything in writing, present your evidence clearly, and don't be deterred by initial rejections – the law is firmly on your side. And if you took out the finance before 2021, it's worth checking separately whether you were mis-sold the finance agreement itself – a distinct claim on the very same agreement, which you can pursue for free.
Frequently asked questions
On hire purchase, PCP or conditional sale, the finance company. The dealer sold the car to the lender, and the lender supplied it to you under the credit agreement, so the lender is the trader for the purposes of the Consumer Rights Act 2015 and answers for the car being of satisfactory quality. You can write to the dealer as well, but the claim that carries weight is the one to the lender. On a personal loan or a credit-card payment the dealer is the seller and section 75 makes the lender jointly liable alongside them.
Not to HP, PCP or conditional sale, because section 75 only applies where the lender and the supplier are different companies, and on those agreements the lender is the supplier. It does apply when you paid any part of the price, even the deposit, by credit card, or when the dealer arranged a personal loan for you, provided the cash price was over £100 and no more than £30,000. On HP and PCP you do not need section 75: the lender's direct liability under the Consumer Rights Act is the stronger right.
Yes, and in writing. On HP or PCP the rejection has to go to the lender, because they own the car and they are the party who supplied it; a letter to the dealer alone does not start the lender's clock. Send the same letter to both, keep copies, and note the date. The lender's eight weeks to give you a final answer run from the day they receive it.
Inside the first 30 days, no: the short-term right to reject does not require a repair attempt, and neither the dealer nor the lender can insist on one. Between 30 days and six months you have to allow one repair or replacement, and if that fails or is not done within a reasonable time you can exercise the final right to reject. After six months the right still exists, but you have to show the fault was there when the car was supplied, which usually means an independent inspection.
Ask them to prove it. In the first six months the law presumes a fault that appears was present at the point of supply, and it is for the lender to show otherwise. Wear and tear means parts worn through normal use over the time you have had the car, and a component that fails within weeks of a sale is rarely that. An independent inspection report, which costs £100 to £250, usually settles it, and the Financial Ombudsman sees the argument constantly.
They cannot, in practice. Once you accept an Ombudsman's final decision it is binding on the firm and enforceable in court, and the FCA treats non-compliance as a regulatory matter. If a firm drags its feet on paying, the Ombudsman's own team chases it, and you can ask the county court to enforce the award without a fresh hearing. Delay happens; refusal is very rare.
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