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Car finance ›
What to do if your financed car is faulty or breaks down
Updated: Thursday, 5 October 2023
If you’ve taken out a car finance agreement and notice something isn’t quite right with your car, you’ll want to know where you stand with getting this fixed.
With most finance agreements, you aren’t the legal owner of the car. This means that your rights may be slightly different than if you’d have bought the car outright, as the finance company will usually be the legal owner.
In this article, we’ll explain the steps you could take if you have a faulty car bought on finance, and outline some of your options so you can get any issues resolved.
If you are an existing Moneybarn customer and are having issues with your vehicle, please see our FAQ explaining how to resolve issues with your vehicle.
What should I do if my financed car is faulty?
Depending on the type of finance you have, you may be the registered keeper of the car. If you’re not sure, check your contract or ask your lender.
If you are the registered keeper, this means that you are responsible for maintaining and servicing the vehicle. You will need to ensure the car is regularly serviced, arrange MOT tests when needed, and fix any faults that develop due to normal usage and general wear and tear.
Just because the car has broken down or needs parts replacing, doesn’t mean that you should stop making your monthly payments for car finance. You may incur a late payment fee, and it can impact your ability to get credit in the future. You should resume your payments while your issue is investigated.
If you notice an issue with your financed vehicle early in the agreement, you should:
If you’ve taken out a car finance agreement and notice something isn’t quite right with your car, you’ll want to know where you stand with getting this fixed.
With most finance agreements, you aren’t the legal owner of the car. This means that your rights may be slightly different than if you’d have bought the car outright, as the finance company will usually be the legal owner.
In this article, we’ll explain the steps you could take if you have a faulty car bought on finance, and outline some of your options so you can get any issues resolved.
If you are an existing Moneybarn customer and are having issues with your vehicle, please see our FAQ explaining how to resolve issues with your vehicle.
What should I do if my financed car is faulty?
Depending on the type of finance you have, you may be the registered keeper of the car. If you’re not sure, check your contract or ask your lender.
If you are the registered keeper, this means that you are responsible for maintaining and servicing the vehicle. You will need to ensure the car is regularly serviced, arrange MOT tests when needed, and fix any faults that develop due to normal usage and general wear and tear.
Just because the car has broken down or needs parts replacing, doesn’t mean that you should stop making your monthly payments for car finance. You may incur a late payment fee, and it can impact your ability to get credit in the future. You should resume your payments while your issue is investigated.
If you notice an issue with your financed vehicle early in the agreement, you should:
Contact the dealership
Speak to the dealership you purchased the car from. They should be able to investigate and resolve the issue for you.
Contact your lender
If the dealership isn’t able to help, or you aren’t satisfied with the outcome, then you should contact your lender who can help.
Provide evidence
The lender may ask for evidence to help with their investigation. It’s important to give them sufficient time to investigate your case.
Refer your case to FOS
If you aren’t satisfied with the solution the lender is offering, you might decide to approach the Financial Ombudsman Service.
Contact the dealership
Speak to the dealership you purchased the car from. They should be able to investigate and resolve the issue for you.
Contact your lender
If the dealership isn’t able to help, or you aren’t satisfied with the outcome, then you should contact your lender who can help.
Provide evidence
The lender may ask for evidence to help with their investigation. It’s important to give them sufficient time to investigate your case.
Refer your case to FOS
If you aren’t satisfied with the solution the lender is offering, you might decide to approach the Financial Ombudsman Service.
Can I cancel my car finance agreement if my car is faulty?
If your financed car is faulty, if doesn’t give you the right to stop paying or cancel your agreement. You should continue to make your monthly payments while your case is being investigated.
If you stop making your payments, your lender could terminate your agreement which could affect your ability to get credit in the future.
What should I do if my car on finance isn’t as described?
If you’ve just received your new car but believe it isn’t as described by the dealership, it’s best to contact your dealership as soon as possible. They will be able to investigate your issue, and may advise you raise a complaint with them so they can look into it and offer a resolution.
What are your rights if you have issues with a financed car?
The Consumer Rights Act 2015 contains laws that provide you with protection. It covers vehicles bought under car finance terms such as Conditional Sale, Personal Contract Purchase, and Hire Purchase agreements.
It’s important to give the dealership and lender sufficient time so they can thoroughly investigate your case and offer a resolution. Every company is different, so check your contract if you’re not sure how long their complaints process takes. Under FCA rules, lenders have 8 weeks from the date they received your complaint to investigate and send you a final response letter.
If you’ve received your final response letter from the dealership/lender and aren’t satisfied with the outcome, you might choose to refer your case to the FOS. If so, you must refer your case to within six months of the date on your final response letter.
Referring a case to the Financial Ombudsman Service
If you’ve already raised the issue with your dealership and lender and you aren’t satisfied with their resolution, you may choose to refer your case to the Financial Ombudsman Service (FOS).
The FOS is a free service that reviews and monitors complaints related to consumer-regulated finance agreements. They help with complaints surrounding financial products and services provided in the UK. This includes vehicle finance.
It’s important to know that you will need to have gone through the dealership and lender complaints process before you can refer your case to the FOS. If you have, and you aren’t satisfied with the resolution they are offering, you could refer it to the FOS.
If you’re having issues with a car you’ve bought on finance, and want to refer your case to the FOS, they typically ask for the following:
- Paperwork that relates to the financed car
- A copy of the vehicle finance agreement
- Detailed information about the car’s faults or issues
- A copy of the mechanic’s report relating to the car’s condition
- Any additional evidence that supports your complaint, such as photos or videos of the problem
The Financial Ombudsman strives to make a fair and reasonable decision by considering the following:
- Relevant regulations and laws
- Regulator rules and guidance
- Industry code of conduct
- Good industry practice
What are the potential outcomes of a complaint?
Once the dealership, lender, or FOS has investigated your case, there are a variety of potential outcomes.
Some potential outcomes may include:
- The dealership agrees to make any necessary repairs
- Your vehicle is replaced if deemed irreparable
- They provide compensation or a price reduction
- They allow you to return the vehicle and end your agreement
Everyone’s case is different, and no one can guarantee that your issues will be resolved straight away. However, your lender will be able to discuss options should you need support or are experiencing financial difficulty.
Can I cancel my car finance agreement if my car is faulty?
If your financed car is faulty, if doesn’t give you the right to stop paying or cancel your agreement. You should continue to make your monthly payments while your case is being investigated.
If you stop making your payments, your lender could terminate your agreement which could affect your ability to get credit in the future.
What should I do if my car on finance isn’t as described?
If you’ve just received your new car but believe it isn’t as described by the dealership, it’s best to contact your dealership as soon as possible. They will be able to investigate your issue, and may advise you raise a complaint with them so they can look into it and offer a resolution.
What are your rights if you have issues with a financed car?
The Consumer Rights Act 2015 contains laws that provide you with protection. It covers vehicles bought under car finance terms such as Conditional Sale, Personal Contract Purchase, and Hire Purchase agreements.
It’s important to give the dealership and lender sufficient time so they can thoroughly investigate your case and offer a resolution. Every company is different, so check your contract if you’re not sure how long their complaints process takes. Under FCA rules, lenders have 8 weeks from the date they received your complaint to investigate and send you a final response letter.
If you’ve received your final response letter from the dealership/lender and aren’t satisfied with the outcome, you might choose to refer your case to the FOS. If so, you must refer your case to within six months of the date on your final response letter.
Referring a case to the Financial Ombudsman Service
If you’ve already raised the issue with your dealership and lender and you aren’t satisfied with their resolution, you may choose to refer your case to the Financial Ombudsman Service (FOS).
The FOS is a free service that reviews and monitors complaints related to consumer-regulated finance agreements. They help with complaints surrounding financial products and services provided in the UK. This includes vehicle finance.
It’s important to know that you will need to have gone through the dealership and lender complaints process before you can refer your case to the FOS. If you have, and you aren’t satisfied with the resolution they are offering, you could refer it to the FOS.
If you’re having issues with a car you’ve bought on finance, and want to refer your case to the FOS, they typically ask for the following:
- Paperwork that relates to the financed car
- A copy of the vehicle finance agreement
- Detailed information about the car’s faults or issues
- A copy of the mechanic’s report relating to the car’s condition
- Any additional evidence that supports your complaint, such as photos or videos of the problem
The Financial Ombudsman strives to make a fair and reasonable decision by considering the following:
- Relevant regulations and laws
- Regulator rules and guidance
- Industry code of conduct
- Good industry practice
What are the potential outcomes of a complaint?
Once the dealership, lender, or FOS has investigated your case, there are a variety of potential outcomes.
Some potential outcomes may include:
- The dealership agrees to make any necessary repairs
- Your vehicle is replaced if deemed irreparable
- They provide compensation or a price reduction
- They allow you to return the vehicle and end your agreement
Everyone’s case is different, and no one can guarantee that your issues will be resolved straight away. However, your lender will be able to discuss options should you need support or are experiencing financial difficulty.
For a better road ahead
Moneybarn is a member of the Finance and Leasing Association, the official trade organisation of the motor finance industry. The FLA promotes best practice in the motor finance industry for lending and leasing to consumers and businesses.
Moneybarn is the trading style of Moneybarn No. 1 Limited, a company registered in England and Wales with company number 04496573, and Moneybarn Limited, a company registered in England and Wales with company number 02766324. The registered address for these companies is: Athena House, Bedford Road, Petersfield, Hampshire, GU32 3LJ.
Moneybarn’s VAT registration number is 180 5559 52.
Moneybarn Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702781)
Moneybarn No. 1 Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702780)
