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

You have clear legal rights if your financed car turns out to be faulty. Car finance doesn't reduce your consumer protection. You're entitled to a vehicle that's safe, reliable, and matches its description.
If the car develops a fault shortly after purchase, you may be able to reject it, request a repair, or ask for a refund. These rights apply whether you used hire purchase (HP), personal contract purchase (PCP), or personal loan agreements (all common types of car finance).
This guide explains how to spot faults, understand your legal position, and take the right steps with your lender or dealer.

What counts as a fault with your vehicle?

Not every issue gives you the right to return the car—but serious faults do.

A fault means any problem that affects the car’s performance, safety, or usability. You can usually request a full refund if the car breaks down, loses power, or has defects in key systems like the engine, brakes, or steering.

For less serious faults – such as a broken light, faulty air conditioning, or seat adjustment problems – the dealer must fix them, but you can't reject the car.

And if you and the dealer can’t agree on how serious the fault is, speak to a legal adviser to understand your next steps.

What should I do if I bought a faulty car on finance?

Act quickly if your car develops a fault, your car finance company must help resolve the issue.

If the problem wasn’t your fault, start by checking your finance agreement. It explains your rights and outlines what protection you have under your contract.

Then contact your finance provider. You’re not dealing with the dealer alone—under most agreements, the finance company shares responsibility for the vehicle’s condition.

Explain when the fault appeared and why you believe it was there at the point of purchase. Include clear details to support your complaint.

Can you cancel a car finance agreement if the car is faulty?

Don’t stop your payments, even if the car is faulty.
Missing payments gives the lender the right to end your agreement, repossess the vehicle, and recover costs from you. That could leave you with no car and still in debt.
Instead, follow the complaints process while keeping up with your repayments. This protects your legal position and shows you acted fairly.
If the Financial Ombudsman later supports your complaint, you could receive a refund for the payments you made. Their decision also helps stop further action from the lender.

What are my consumer rights for a faulty car bought on finance?

You have strong legal rights—even when you use finance to buy a car.

The Consumer Rights Act 2015 protects you from being left with a faulty or unsafe vehicle. This law applies to financed cars just as it does to cash purchases. It states that the car must be of satisfactory quality (free from defects), fit for purpose (able to do what it’s meant to), and as described at the point of sale.

These rights apply no matter how you financed the car—through Hire Purchase (HP), Personal Contract Purchase (PCP), or a personal loan. If the vehicle fails to meet these standards, you may be entitled to a free repair, replacement, or refund. You don’t have to accept a poor-quality car just because you bought it on finance.

Check your finance agreement to understand the steps for dealing with faults. It often explains how to raise a complaint and who holds responsibility. And if the dealer denies the fault or asks you to pay for repairs, contact the Financial Ombudsman for free support or speak to a solicitor specialising in consumer law.

What’s not covered by the law?

The law won’t cover wear and tear or delays in action. The Consumer Rights Act 2015 protects you for up to six years, but you must act promptly. If you delay, it becomes harder to prove the fault existed at the time of purchase.

Over time, some issues may be classed as normal wear and tear. These include things like worn tyres, faded paint, light scratches, or brake pad wear, all signs of regular use.

And if the fault developed slowly or appeared much later, the dealer may argue it wasn’t present from the start. This can weaken your case, so always report problems as soon as you spot them.

How do you go about returning a car or having it repaired?

To return a vehicle or have it repaired, follow the guidelines below.

Right to repair

Dealers must repair the car or offer a replacement if it’s faulty. You usually need to request a repair or replacement before seeking a refund. The Consumer Rights Act 2015 gives the dealer one chance to fix the problem. If they refuse or fail to resolve it, you can then ask for a price reduction or partial refund.

You may still have questions, such as:

• Can the dealer use second-hand parts?
• Will the dealer cover all repair costs?
• Do you have to claim through the warranty?
• How long should a repair take?

The answers depend on your agreement and the nature of the fault. But the dealer must act within a reasonable time and without causing major inconvenience.

If you report the fault after 30 days but within six months of delivery, the dealer must prove the problem wasn’t present when the car was sold. If they can’t, they remain responsible.

And if the dealer claims you knew about the issue or caused it, they can refuse a refund. In that case, you’ll need to challenge their evidence.

If they attempt a repair, they only get one chance. If the same fault appears again, you can reject the car or request a price reduction. Any refund will reflect the use you’ve had from the vehicle.

Reject a car on finance

You can reject a financed car, but only after the dealer fails to fix the fault. By law, rejection comes last, only use it when repairs haven’t worked or the dealer refuses to cooperate. At that point, you can start the formal process of rejecting the vehicle.

If you bought the car on finance, you're the registered keeper, not the legal owner. The finance company owns the vehicle and must handle the rejection process. Contact them directly and explain the situation in writing.

If they don’t accept your claim, gather your evidence and take the complaint further. The Financial Ombudsman can review your case if you can show you followed the right steps.

You’ll need to provide:

• A copy of the finance or hire purchase agreement
• Vehicle details and history
• All paperwork from the dealership
• A mechanic’s report confirming the fault
• Any other proof that supports your claim

And if the dealer or finance provider still won’t cooperate, contact the Financial Conduct Authority (FCA) or Trading Standards for advice.

Buying from a licensed dealer gives you stronger rights, so always check the trader's status before you agree to finance a car.

Can I claim if I bought a faulty car on finance and it wasn’t my fault?

Yes, you can make a claim if the fault wasn’t caused by you. You have the right to raise a complaint if the vehicle is faulty due to poor quality, a hidden issue, or a manufacturing defect. Acting early helps you protect your position and improve your chances of a fair outcome.

If the fault is due to a manufacturing defect, the warranty may apply. But you must still deal with the dealer or finance provider, not the manufacturer directly. This usually applies to newer cars still under warranty. But if you bought a second-hand car, the warranty might have expired—especially if the vehicle is over five years old.

Still, if the fault wasn’t caused by misuse or neglect, you can raise the issue with the finance company or seek legal advice. And if you're unsure how to proceed, the Financial Ombudsman offers free guidance to help you understand your options.

Contact our brokers for consultation

If you’re dealing with a faulty car on finance, you don’t need to face it alone. Our brokers understand the law, the finance process, and how to handle disputes with lenders or dealers.

Speak with us to review your agreement, check your options, and decide the best way forward. We’ll help you understand your rights and point you towards a practical solution.