What is Hire Purchase mis-selling?

Hire Purchase mis-selling occurs when an HP agreement is sold without clear, fair and transparent information. This may involve undisclosed commission, discretionary interest rates, or inadequate explanation of costs.

Is Hire Purchase safer than PCP?

Not necessarily. While Hire Purchase agreements can appear simpler than PCP, they can still involve discretionary interest rates and commission arrangements that raise fairness concerns.

Does Hire Purchase involve commission?

Yes. Many Hire Purchase agreements involve commission paid by the lender to the dealer. Issues arise when this commission is not clearly disclosed or influences the interest rate offered.

Can closed Hire Purchase agreements be reviewed?

Yes. Hire Purchase agreements do not need to be active to be reviewed. Closed agreements may still be considered depending on time limits and when the issue became apparent.

Does Hire Purchase mis-selling guarantee compensation?

No. Compensation is not guaranteed. Outcomes depend on individual circumstances and how the agreement was sold.

Hire Purchase Mis-Selling Explained

Hire Purchase (HP) agreements are often viewed as simple and straightforward. However, many Hire Purchase agreements were sold in ways that raise concerns about transparency and fairness.

Part of the complete guide: Car finance mis-selling explained →

What is Hire Purchase?

Hire Purchase is a form of car finance where you pay an initial deposit followed by fixed monthly payments. Ownership of the vehicle transfers to you only after the final payment is made.

Because the structure appears simple, customers often assume the agreement is automatically fair and fully transparent.

How Hire Purchase agreements are typically sold

HP agreements are usually arranged at the dealership. The focus is often on affordability and monthly payments rather than APR comparison or total cost of credit.

In some cases, customers are presented with the agreement as standard or non-negotiable.

Where Hire Purchase mis-selling concerns arise

Hire Purchase mis-selling concerns commonly arise where:

The interest rate was higher than expected
Commission arrangements were not disclosed
It was not explained that the rate could be discretionary
Alternatives were not discussed

Hire Purchase and hidden commission

Many Hire Purchase agreements involved commission paid by the lender to the dealer. Problems arise when customers were not told that commission existed or that it could influence the interest rate.

Related: Hidden commission explained →

Hire Purchase and Discretionary Commission Models

In some cases, Hire Purchase agreements were linked to Discretionary Commission Models (DCMs), allowing dealers to increase interest rates and earn more commission.

Does Hire Purchase mis-selling mean something went wrong?

Not necessarily. Mis-selling depends on how the agreement was sold and what information was provided at the time.

Understanding Hire Purchase mis-selling helps explain why some agreements are now being reviewed.

Next step: How to complain about car finance mis-selling →