Faulty cars on finance

Can I return a car on finance if it’s faulty?

If you’ve bought a car on finance and it is faulty, you’ll need to report the issue to the finance company that your agreement is with. This will apply whether your agreement is personal contract purchase (PCP) or hire purchase (HP). If you have leased your car, your agreement is with your leasing company. With finance agreements, the finance company is essentially the owner of the vehicle until the final payment is made, which is why it’s important to contact them if the car bought on finance is faulty. You should contact them in writing and tell them whether you would like to return (i.e. reject) the car or have it repaired.

Usually, the finance company will want to assess the vehicle to check what the problem is and how much the repairs will cost. They will then usually send you a written response about what will happen next. Generally, if the fault is found to be serious, the finance company will either agree to take the vehicle back and replace it, or may refund you, or they may wish to repair the car and send it back for you to continue with your agreement. If you don’t agree with the proposed next action of the finance company, you can take the case to the financial ombudsman service, who will make a final decision on the situation.

If you don’t believe that the finance company are meeting their obligations, and they are refusing to refund you or replace a car that you believe to be still faulty or unsafe, you might want to take legal advice about what you can potentially do next. Get in touch with our dispute resolution team on 0161 696 6178 for more information.

Can you cancel car finance if the car is faulty?

Cancelling car finance due to a faulty car can sometimes be done, depending on the circumstances and if the correct protocol is followed. You must not simply stop paying your monthly car finance payments if your car is faulty.

Cancelling your payments without pre-agreeing this with your finance company would result in you breaching the agreement that you have with them and you may be liable for costs. This may also potentially have a negative impact on your credit file which could prevent you from taking out finance agreements for many years into the future.

The car finance company may agree to cancel your agreement if the car is found to have a serious defect that will cost more than they wish to pay to repair, or if offering an equivalent replacement vehicle isn’t possible. It’s important to keep copies of any correspondence with your finance company and get written proof of any verbal agreements they make over the phone with you about what is happening with your faulty car.

In most cases, they will either refund you the payments already made and your deposit, or agree to provide you with a replacement vehicle that is equivalent to the one which is faulty. You can specify your preference when you contact them to reject your original vehicle, but they are not legally obliged to refund you if providing a replacement car is a viable option.

For help resolving a dispute related to a faulty car bought on finance, call our team on 0161 696 6178.