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 a debit card), and there's a valid claim against the supplier. This covers most car purchases on Hire Purchase (HP), Personal Contract Purchase (PCP), and credit cards (if you paid even part of the deposit by credit card, the whole purchase is covered). For a detailed comparison of Section 75 and chargeback options, see our Section 75 vs Chargeback guide.
Why Claim Against the Finance Company?
They're Often More Cooperative
Finance companies are regulated by the FCA (Financial Conduct Authority) 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.
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How to Make a Section 75 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: Section 75 of the Consumer Credit Act 1974, the Consumer Rights Act 2015 (specifically satisfactory quality and fitness for purpose), and any misrepresentation that occurred.
Set a 14-day deadline for them to respond with a proposed resolution. If they don't resolve it satisfactorily, escalate to the Financial Ombudsman Service (FOS) – it's free to use and has real 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, or the car's value has dropped significantly. The key difference is that voluntary termination means you walk away without getting money back, whereas Section 75 can get you a full refund of payments made 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.
Recommended reading
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 £430,000, and make decisions that are binding on the company. Finance companies dislike FOS complaints intensely – they cost them money and affect their regulatory standing. Often, just mentioning the FOS in your correspondence is enough to prompt action.
The Bottom Line
If you bought on credit, you have powerful extra protection beyond your rights against the dealer alone. Section 75 makes the finance company equally liable for faulty goods, 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.
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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