Jasmine Birtles
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Nick Knowles: “Most drivers don’t ask the one question that could save them thousands on car finance”
Moneymagpie Team
13th Aug 2026
Around 12.1 million motor finance agreements could be eligible for consideration under the Financial Conduct Authority’s (FCA) proposed compensation schemes, with average redress estimated at £829 per agreement. The regulator estimates that firms could pay around £7.5 billion in compensation, while the total cost, including administering the schemes, could reach approximately £9.1 billion.
For drivers choosing a finance deal today, the outcome of the Supreme Court ruling should provide greater confidence in how commission arrangements and interest rates are disclosed. However, it remains important to look beyond the monthly payment and understand the agreement’s total cost and whether the car will belong to you at the end.
A consumer awareness campaign from Mis-Sold Expert, fronted by Nick Knowles, is encouraging drivers to look beyond the monthly payment and understand the full cost, terms and ownership outcome of a car finance agreement.
Phil Thorpe, Lead Claims Handler at Mis-Sold Expert, said:
“If the FCA’s ongoing motor finance redress process teaches us anything, it is that drivers should take time to understand a finance agreement before signing it.
Check the type of finance, the total amount payable, any fees or final payment, and whether you will own the car at the end. Do not feel pressured to sign before you are ready. Read the documents carefully, ask questions and take them away to review where possible.
You may spend time choosing the colour and features of your new car, but reviewing the finance agreement matters just as much. If you cannot explain the agreement clearly in your own words, ask for further clarification before deciding whether it is right for you.”
- Before signing: the five-question car finance checklist
- Reviewing an existing agreement: five things to check
- Why this matters
Before signing: the five-question car finance checklist
1. Will I own the car at the end?
The answer depends on the type of agreement.
Hire Purchase (HP): A route to ownership. Once all payments and any final purchase fee have been made, the car normally becomes yours.
Personal Contract Purchase (PCP): A mix of buying and renting. At the end, you can usually return the car, move into another agreement or make a final balloon payment to keep it.
Personal Contract Hire (PCH): A long-term rental. You return the car when the agreement ends and do not become its owner.
Three agreements can have similar-looking monthly payments but lead to very different outcomes.
2. What will I pay in total?
Ask for the full cost in writing, including:
- the cash price of the car;
- the deposit or initial rental;
- the APR being offered;
- the total amount payable;
- any final balloon or purchase payment; and
- administration, purchase or return fees.
The figure to compare is the total cost of each deal, not simply the advertised monthly payment.
3. Will anyone receive commission for arranging the finance?
Ask the dealer or broker:
- whether they will receive commission;
- how much they are likely to receive;
- whether the amount changes between lenders or products; and
- whether it could affect the deal being recommended.
Commission does not automatically mean an agreement is unfair, but drivers should understand how the person arranging the finance is being paid.
4. What restrictions and additional charges apply?
Check the agreement for:
- annual mileage limits and excess mileage charges;
- fair wear and tear requirements;
- servicing conditions;
- return fees; and
- optional warranties, insurance products or service plans.
These costs can make an apparently affordable PCP or PCH deal significantly more expensive.
5. What happens if my circumstances change?
Ask for a worked example showing what it would cost to end the agreement early.
Drivers should also consider whether they could continue to afford the car if their income or household expenses changed. The real cost of ownership includes insurance, fuel or charging, tax, servicing, tyres and repairs — not only the finance payment.
Reviewing an existing agreement: five things to check
Most customers will never have reason to question their finance agreement. However, because the FCA is considering compensation for some historic motor finance sales, drivers with existing agreements may wish to review the paperwork and check how the finance was explained when they signed.
Signing an agreement does not automatically mean it was mis-sold, and a high interest rate on its own is not evidence that anything went wrong.
1. Was the type of agreement made clear?
The paperwork should clearly explain whether you were buying the car, renting it or retaining the option to buy it later.
2. Were all the important costs explained?
Check whether the documents clearly set out the APR, total amount payable, final payment, fees and any charges connected with returning the vehicle.
3. Was the commission disclosed?
Review the agreement and pre-contract information for details of any commission or commercial arrangement involving the dealer, broker and lender.
4. Were the restrictions explained before signing?
Look for mileage limits, return conditions, fair wear and tear rules, early termination terms and charges for optional products.
5. Does the paperwork match what was said during the sale?
Keep copies of the agreement, finance illustration, disclosure documents, emails and statements. Any important promises made during the sales process should also appear in the written agreement.
“The most useful question a driver can ask is not simply, ‘Can I afford the monthly payment?’ It is, ‘What will this agreement cost from start to finish, and what will I have at the end?’
Two finance offers can have similar monthly payments but very different deposits, interest charges, final payments, mileage limits and ownership outcomes. Drivers should ask for the full figures in writing and compare them side by side.
A deal that looks cheaper each month may not be the lowest-cost option overall.”
Phil Thorpe, Lead Claims Handler at Mis-Sold Expert
Why this matters
The FCA has proposed two compensation schemes covering historic motor finance agreements:
- Scheme 1: Agreements entered into between 6 April 2007 and 31 March 2014.
- Scheme 2: Agreements entered into between 1 April 2014 and 1 November 2024.
Being within one of these date ranges does not automatically mean compensation will be paid. Each agreement would need to be assessed on its individual circumstances and the way it was sold.
Consumers can complain directly to their lender free of charge and do not have to appoint a claims management company.
A claims management company can review and manage a complaint on someone’s behalf, but the service is optional. Before appointing one, consumers should check that the firm is authorised and understand what fees may apply.
Whether you’re arranging car finance for the first time or reviewing an older agreement, the key questions remain the same: What am I paying in total? Will I own the car? What restrictions apply? And do I fully understand the agreement before committing?
Taking the time to answer those questions could prove far more valuable than focusing solely on the advertised monthly payment.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
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