Bought your car on finance and discovered it's faulty? Here's something most dealers don't want you to know: your finance company may be just as liable as the dealer – and often easier to deal with.
Understanding Section 75 Protection
Section 75 of the Consumer Credit Act 1974 makes your credit provider "jointly and severally liable" for breaches of contract or misrepresentation by the supplier.
In plain English: if the dealer sold you a faulty car, the finance company is equally responsible. You can claim against either or both.
When Does Section 75 Apply?
Section 75 applies when:
- The cash price of the item is over £100 and under £30,000
- You paid using a credit agreement (not debit card)
- There's a valid claim against the supplier
This covers most car purchases on:
- Hire Purchase (HP)
- Personal Contract Purchase (PCP)
- Credit cards (if you paid even part of the deposit)
Why Claim Against the Finance Company?
They're Often More Cooperative
Finance companies are regulated by the FCA and take complaints seriously. They have procedures for handling disputes and want to avoid regulatory scrutiny.
The Dealer Can't Ignore Them
When the finance company gets involved, dealers pay attention. Finance companies have ongoing business relationships with dealers and can apply pressure.
Extra Layer of Protection
If the dealer goes bust or refuses to cooperate, the finance company remains liable. You're not left without options.
They Handle the Complexity
Finance companies have legal teams and understand consumer law. They often resolve disputes faster than fighting a dealer directly.
How to Make a Section 75 Claim
Step 1: Gather Your Evidence
Before contacting the finance company, collect:
- Your finance agreement
- Proof of the fault (photos, videos, diagnostic reports)
- Correspondence with the dealer
- Any repair attempts or invoices
- Timeline of events
Step 2: Write to the Finance Company
Send a formal letter (email is fine) including:
- Your account/agreement number
- Vehicle details (registration, make, model)
- Purchase date and price
- Description of the fault
- What you've tried with the dealer
- What you want (refund, repair, compensation)
Step 3: Reference the Right Laws
Mention:
- Section 75 of the Consumer Credit Act 1974
- Consumer Rights Act 2015 (satisfactory quality, fit for purpose)
- Any misrepresentation that occurred
Step 4: Set a Deadline
Give them 14 days to respond with a proposed resolution.
Step 5: Escalate If Needed
If they don't resolve it satisfactorily, you can:
- Complain to the Financial Ombudsman Service (FOS)
- The FOS is free to use and has powers to order compensation
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 Section 75 and can be useful if:
- You can't prove a fault
- You just want out of the agreement
- The car's value has dropped significantly
However, voluntary termination means you walk away – you don't get money back. Section 75 can get you a refund plus compensation.
Common Finance Company Excuses (And How to Counter Them)
"You need to deal with the dealer first"
Wrong. Section 75 creates joint liability. You can claim against either party. You're not required to pursue the dealer first.
"The fault isn't covered because..."
The finance company can't limit their Section 75 liability. If the dealer breached the contract, the finance company is liable.
"It's outside the time limit"
Section 75 claims can be made within 6 years of the breach of contract. That's much longer than most people think.
"We're just the lender"
The whole point of Section 75 is that the lender shares responsibility with the supplier. That's the law.
Real Example: How It Works in Practice
Sarah bought a BMW 3 Series on PCP for £25,000. Within 2 months, the engine developed a serious fault. The dealer claimed it was "wear and tear" and refused to help.
Sarah wrote to her finance company (BMW Financial Services) citing Section 75. Within 3 weeks, they'd:
- Contacted the dealer on her behalf
- Arranged an independent inspection
- Agreed the fault existed at time of sale
- Offered to unwind the agreement with a full refund of payments made
Total time: 6 weeks. If she'd battled the dealer alone, it could have taken months.
The Financial Ombudsman: Your Secret Weapon
If the finance company refuses to help or offers an inadequate solution, complain to the Financial Ombudsman Service (FOS).
The FOS can:
- Investigate your complaint for free
- Order the finance company to pay compensation up to £415,000
- Make decisions that are binding on the company
Finance companies hate FOS complaints – they cost them money and affect their regulatory standing. Often, just mentioning the FOS gets results.
Key Takeaways
- If you bought on credit, you have extra protection beyond your rights against the dealer
- Section 75 makes the finance company equally liable for faulty goods
- You don't have to pursue the dealer first – go straight to the finance company if you prefer
- The Financial Ombudsman is free and has real powers to help you
- Keep everything in writing for evidence
Bought a faulty car on finance? Check if you qualify for our rejection service – we deal with dealers AND finance companies.
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