Returning a car on finance due to faults

Discovering a fault in your financed car can be frustrating, but you have rights to protect you. When you buy a used car, especially on finance, it’s crucial to know where you stand if something goes wrong. Fortunately, the law supports you with a clear set of protections.

Financing doesn’t reduce your rights—you’re entitled to the same standards as if you’d bought a new car. This guide explains your rights and walks you through the steps to resolve issues with a faulty vehicle on finance.

What counts as a fault with your vehicle?

A fault is any issue that disrupts your car's normal operation. Serious faults, like engine stalling, window malfunctions, or problems with the steering system, entitle you to request a full refund.

For minor issues—such as seat adjustment failures, a blown headlight bulb, or undisclosed air conditioning faults—the dealer must repair them, though you’re not entitled to a refund.

If you disagree on whether a fault is major or minor, consider consulting legal advice to help resolve the issue.

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

If you’ve financed a new or used car and notice a fault that wasn’t caused by you, follow these steps. First, review your finance agreement carefully—it outlines your rights and details the level of protection in your contract.

Next, contact the finance company directly to report the issue, whether it’s an engine fault or another problem. If you believe the fault was present when you bought the car, even if it appeared later, you’re within your rights to make a complaint. Clearly explain to the dealer how and when you identified the fault to support your case.

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

Avoid stopping payments or cancelling your finance agreement if the car is faulty. Doing so could allow the lender to terminate your contract, repossess the car, sell it at auction, and claim any financial losses from you.

If the ombudsman supports your case, you could be refunded for payments made on a defective vehicle. Consult the ombudsman to understand your options and protect your rights effectively.

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

If you buy a car on finance and it turns out to be faulty, you’re protected by consumer rights. You have the same rights as if you bought a new car outright or financed it through PCP  or Hire Purchase.

Under the Consumer Rights Act 2015 , you’re entitled to a vehicle of satisfactory quality and fit for purpose. This law protects you from being stuck with a poorly functioning car, and you shouldn’t have to pay for one that isn’t in good working order.

Carefully review your finance agreement to see how any potential issues are handled. If your dealer disputes responsibility or tries to charge you for repairs, you can contact the Financial Ombudsman for free guidance or seek legal advice to support your case.

What’s not covered by the law?

The Consumer Rights Act 2015 protects you for up to six years, but claims can be harder to prove over time. Delays may lead to faults being classified as normal wear and tear, making it challenging to hold the dealer accountable. Routine issues like minor scratches, worn tyres, or brake pad deterioration may not be covered, as these are expected with regular use.

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

Most buyers first seek repairs or a replacement for a faulty car. The law requires dealers to fix issues with a car they’ve sold, so you have the right to repairs or, if necessary, a replacement.

Common questions include:

• Can the dealer use used parts for repairs?
• Will the dealer cover repair costs under warranty?
• Must you use the warranty?
• How long should the repair take?

Keep your finance company informed in writing about any issues and all steps taken.

If you report a fault after 30 days but within six months of purchase, you can choose a repair or replacement. The seller must prove the fault didn’t exist at the sale if they wish to deny responsibility. If they can show you knew about the issue, a refund may not be possible.

The dealer has one opportunity to resolve the issue before you can claim a partial refund. This refund won’t cover the full purchase price, as it will account for the car’s usage up to that point.

Reject a car on finance

If you financed a faulty car, remember that you’re the registered keeper, not the owner. Contact the finance company—they’ll handle negotiations with the dealer on your behalf. If issues arise, reach out to the Financial Conduct Authority (FCA) or Trading Standards.

Rejecting the car should be a last resort. If the dealer is unhelpful or fails to fix the problem, then consider rejecting the car and starting fresh.

If your finance provider denies your claim, contact the Financial Ombudsman Service. You’ll need to provide:

• A copy of the finance or hire purchase agreement
• Details of the car, including its history
• All car-related paperwork
• A mechanic’s report on the car’s condition
• Any further evidence to support your complaint

Buying from a licensed dealer provides you with stronger legal protection, so make sure you understand your rights.

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

Yes, if you bought a car on finance and it turned out to be faulty through no fault of your own, you can make a claim. Acting quickly increases your chances of success.

The manufacturer can be held liable if the fault is due to a manufacturing defect. For second-hand cars, the manufacturer’s warranty may not apply if the vehicle is over five years old. However, if the fault was clearly not caused by you, you may be eligible to file a claim or receive free legal advice to support your case.

Contact our brokers for consultation

At Carplus, we’re here to support you with any concerns about car finance. If you think you’ve bought a faulty car on finance, speak with one of our expert brokers today to understand your options.