Faulty Car on Finance

If you've bought a car on finance and discovered it has a fault, we help you identify your rights and next steps.

You've just bought a car on finance, and you're so excited to collect it and drive it away for the first time. There's something really special about getting a new car and all the feelings that come with it.

It may be immediately, a few days later or even a couple of weeks later that you notice an issue with the vehicle. Maybe it's making funny noises, or a warning light has come on. 

Either way, it's a gutting moment to see your new pride and joy having an issue that it shouldn't have so soon after purchasing and driving it away from the car dealership.

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Not only that, but it can be extremely frustrating. It's an inconvenience to have to find the right person to speak with to understand your options, and also, if your car is out of action, you may find it tough to get to work or take the children to school.

If this is something that has affected you, or you're picking up a new car and are worried about what to do if there is an issue, we have you covered. We review your rights and next steps to help you understand your options.

Can I get a refund?

If you have bought a car on finance and you discover there's a fault, your first thought will likely be what your rights are and, most importantly, whether you can get a refund or a new car.

The first thing you'll need to do is contact your lender as soon as you discover the fault. While the obvious thing would be to contact the dealer, the lender is whom you are borrowing money from, so they essentially own the vehicle.

You should do this regardless of whether you have a Personal Contract Purchase (PCP) or Hire Purchase (HP) finance deal. If you have a Personal Contract Hire (PCH) deal, you should contact the leasing company. 

When you speak to the finance company, you should make it known whether you would like the vehicle repaired so you keep it once it's fixed, or the finance agreement cancelled and your money returned.


The finance company will likely want to see the car before making its decision, to identify the issue and how much the problem could potentially cost to fix.

If the fault is serious, they will either agree to take it to be repaired, replace the car completely, or refund you. If their decision is one you disagree with, you can take the case to the financial ombudsman, who will act as an unbiased middle-man to make the decision.

Can I cancel my car finance deal?

Cancelling your finance deal if your car is proven to be faulty could be an option but will depend on how big and substantial the fault is. You can't stop making your monthly repayments if you want to cancel.

If you decided to cancel your finance without approval from the lender, you will be in breach of your contract, could have the car seized and will significantly impact your credit score.

If the lender finds a serious problem with the vehicle, they may agree to cancel your contract, especially if the car will cost more than they want to pay to repair it or if a new car to replace it isn't possible.

Should they offer you a refund, you will be entitled to get your deposit back, alongside any monthly repayments you've already made. However, if a replacement car is available, they may not allow you to get a refund.

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How long do I have to report a problem?

If you've had the car for less than 30 days, The Consumer Rights Act offers you the right to reject the vehicle if it is faulty and claim a full refund. If you'd prefer to keep that car or get a new one of the same model, you can ask for it to be repaired or replaced. 

Proof will be needed that the car was faulty before it was sold to you. If it can't be proven, and it appears that the vehicle was damaged after you bought it, you may not have any rights.

You are required to give the dealer a chance to repair or replace the car, and they should do this without causing too much inconvenience or any cost to yourself.

If you've owned the car for more than 30 days, you are entitled to ask for a repair or replacement. If either of those options is unsuccessful or unavailable, you should be entitled to a refund.


How do I make a complaint to the financial ombudsman?

It's a fairly easy process to make a complaint to the financial ombudsman. You will need to fill out and send off a form with all of the information, including any documents or letters to support your case.

Do I need to stop driving the car if I notice a fault?

If you discover a fault in your newly purchased car, after contacting the lender, you should stop driving the car to prevent any other faults occurring which could potentially harm your rights when attempting to get a refund, repair or replacement.