PCP vs HP — which agreements qualify for a DCA claim?

In short: Both PCP and HP agreements can be claimed on where the dealer or broker arranged the finance and commission or lender ties were not clearly disclosed. DCA-specific claims relate to agreements before 28 January 2021 (the FCA’s DCA ban date). The FCA’s wider 2026 scheme also covers some high-commission and contractual-tie arrangements after that date, up to 1 November 2024. Personal loans, leases, business contract hire and cash purchases sit outside the scope.

If a motorist tells us “the dealer set me up with the finance”, that is almost always a yes worth checking. Below is the detail on which agreements qualify and which do not.

The two finance types in scope

Personal Contract Purchase (PCP)

PCP splits the cost of the car into three parts: a deposit, monthly payments over 2–4 years, and an optional final balloon payment to keep the car. The dealer arranges the finance through a lender, often the carmaker’s own finance arm.

PCP was the dominant new-car finance product in the UK during the affected years. At the peak, roughly 80% of new cars were sold on PCP. Dealer-arranged PCP agreements before the ban are squarely in scope.

Hire Purchase (HP)

HP is simpler: a deposit followed by equal monthly payments, and you own the car at the end. HP is more common for used cars.

Where a dealer or broker arranged the HP and commission or lender ties were not properly explained, the agreement falls into the same scope as PCP. The section 140A “unfair relationship” test is the underlying legal framework for these complaints.

What is NOT in scope

• Personal loans used to buy a car. A loan from your own bank, then used to pay the dealer in cash, is not a DCA claim. The lender–borrower relationship was direct and the dealer earned no finance commission. The car was incidental.
• PCH / leases. Personal Contract Hire is pure rental. You never own the car, so it sits outside the consumer credit rules the redress scheme is built on.
• Business contract hire or business HP. Agreements in a Ltd company or partnership name are excluded. A narrow exception exists for sole traders financing a vehicle mainly for personal use; we look at these one at a time.
• Cash purchases, gifts, inherited cars. No finance agreement, no claim.
• Agreements signed after 28 January 2021. The FCA banned DCAs on that date, so anything signed after is outside DCA-specific redress. The wider 2026 scheme may still cover certain high-commission or lender-tie arrangements up to 1 November 2024 — see our FCA scheme explainer.

Borderline cases worth flagging

• Refinanced agreements. If you rolled a PCP balloon into a new HP, each leg is assessed separately.
• Voluntary terminations. If you handed the car back early after paying 50% of the total, the original agreement is still claimable.
• Sub-prime “easy credit” deals. If it was a regulated credit agreement with a real lender, it is in scope. If it was a private rental dressed up as ownership, it is not.
• Motorbikes, vans, motorhomes. In scope where financed via PCP or HP.
• Caravans. Often sit on a separate consumer credit agreement and may still qualify.

How to find out which of your agreements qualify

You do not need to work this out yourself. A soft credit search — record-only, with no impact on your credit score — surfaces historic PCP and HP agreements automatically. We then screen each one against the agreement date, lender, dealer-arrangement and disclosure criteria.

If you no longer have the paperwork, that is fine too. Our guide on claiming without finance paperwork explains how the lender reconstructs the file.

Ready to check?

Start your free eligibility check →

---

You can also complain free of charge by contacting your lender directly, or refer an unsuccessful complaint to the Financial Ombudsman Service for free. No outcome is guaranteed.