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

Roman Danaev

13 April 2022

A fault in your vehicle should be the last thing on your mind when purchasing a used car. If something goes wrong, you'll want to know where you stand. Unfortunately, this does happen from time to time. It's a good thing that there are rules in place.

Having a car on finance doesn't mean you have fewer rights than if you had a traditional loan. You're still entitled to the same protections as if you'd bought a brand-new car off a showroom yourself.

This article will go over your rights if you have a faulty car bought on finance and will explain how to resolve the situation.

What counts as a fault with your vehicle?

The simplest definition of a fault is anything that interferes with the operation of your car. Serious problems include things like the engine shutting off, the windows not working, or a problem with the wheel axis. You are entitled to a full refund if this is the case.

Minor problems, such as the inability to adjust the seats, the failure of a headlight bulb, or a fault with the air conditioning (which was not indicated at the time of purchase), must be fixed by your dealer. However, you are not entitled to a refund for these concerns.

If a disagreement arises between the parties as to whether a fault is slight or major, we recommend seeking legal assistance.

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

Suppose you've taken out a loan for a new or used car, and you suddenly discover a problem with the vehicle. You are confident that the fault was not caused by you.

As a first step, check over your car finance agreement, which will reveal a lot about the terms and conditions of your contract, as well as how much coverage is provided.

Next, you'll need to contact the car finance company and explain the problem, whether it's an engine issue or something else.

If the problem with the faulty car on finance was caused by you and you believe the car was already defective, you have the right to file a complaint. However, you must clarify to the car dealer how you discovered the fault.

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

Stopping the monthly payments or cancelling the car finance would be a terrible idea. If you do, the loan company has the option of terminating your agreement and repossessing the car. It can then sell it at auction and sue you for the losses it has suffered.

If the car bought on finance is faulty and the ombudsman supports your case, the wasted financial product payments will most likely be refunded back to you.

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

If you were to buy a faulty car on finance, you would still be entitled to consumer rights. The same rules apply if you bought a new car outright or bought a car on a finance deal with a product such as PCP or Hire purchase.

The Consumer Rights Act (CRA) can play an essential role in the case of a faulty car bought on finance, so let's examine the act.

The Consumer Rights Act 2015 safeguards customers from being put in a difficult situation if the product, service, or car they purchased was of poor quality. However, the car should be in good working order when getting car finance from a vendor or dealership because you would not pay for a faulty car.

As a precaution, you should carefully review the terms and conditions of your car financing agreement to determine if your car dealer has included information about what would happen if a problem ever occurred with the vehicle. Following a conversation with the auto dealer, if things get difficult and you are being held responsible or billed for the fault, you can always approach the financial ombudsman for free or seek legal advice.

What’s not covered by the law?

The Consumer Rights Act 2015 provides six years of protection for consumers' rights. As a result, if you wait to file a claim, it may be more difficult to substantiate and could be shrugged off as normal wear and tear of the car.

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

The most prevalent claim by car buyers is the entitlement to repair work or replacement. The law recognizes that things go wrong and that dealers should at least be required to fix them. Although this raises several questions for consumers, such as,

  • Is it possible for the dealer to use second-hand parts?
  • Is it possible for the dealer to recover the cost of the repairs under warranty?
  • Do I have to make use of the warranty?
  • What's a fair amount of time for the repair to take?

It's critical that you keep the finance company up to date at all times and that you do it in writing.

If you notice a problem with the car after 30 days, but before six months have passed since purchase, you have the option of having it repaired or getting a new one. It is the seller's responsibility to show that the defect was not present at the time of sale. If they can prove that you were aware of the issue, you may not be eligible for a refund.

The retailer will only be given one chance to correct the problem before the customer is entitled to a refund. This will not be the total purchase price, as the usage of the car will be taken into account, and the refund will be reduced appropriately.

Reject a car on finance

If the faulty car is bought on finance you are only the registered keeper, not the actual owner. Contact the finance company, and they'll negotiate with the dealer on your behalf. If you encounter difficulties, you can contact the Financial Conduct Authority (FCA) or Trading Standards.

Regardless of the car, don't be hasty in rejecting it; it should always be a last resort. If the dealer is difficult, unhelpful, or can't remedy the problem when given the chance, you should reject the car and start again.

If your claim to your provider or finance company is denied, you should approach the Financial Ombudsman Service. To accomplish this, you'll need to supply:

  • A copy of the loan or hire purchase agreement
  • Detailed information about the subject car.
  • All paperwork related to the car.
  • Copy of mechanic's report on the car's condition
  • Additional evidence in support of the specific complaint.

Remember that if you purchased your vehicle from a licensed dealer, you will have more legal protection.

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

Yes, you can make a claim if you acquired a defective car or vehicle with a finance deal because it was not your fault: the more recent the claim, the better.

It is possible for the car manufacturer to be held responsible or liable if there is a manufacturing defect.

A second-hand car may not be covered by the manufacturer's warranty if it has been out of service for more than five years, but if you just purchased a faulty car on finance and it was 100% not your mistake, you may be able to register a dispute or get free legal assistance.

Contact our brokers for consultation

At Carplus, our goal is to help customers in every corner of the nation with their concerns regarding car finance. To find out if you bought a faulty car on finance, speak with one of our brokers today.

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