Misleading finance agreement

The consumer’s issue:

“I bought a new saloon in 2016 using a finance agreement. At the time of purchase, the monthly payments were supposed to be £199 per month, but I was advised by the sales agent that If I paid a little bit more, then a pot of money would accrue, which I could then use to purchase a different vehicle or put towards additional extras.

I was also advised to put down an annual mileage limit of 6,000 miles on the agreement despite telling the agent that I covered around 7,500 miles a year. So, when the agreement came to an end after three years, I was asked to pay excess mileage charges and there was no pot of money which I could use to buy another car. I feel that the sales agent misled me into entering into the agreement, and provided incorrect information. I am therefore looking for the dealership to provide me with financial compensation to cover my excess mileage charges.”

The accredited business’ response:

  • The consumer was aware of the annual mileage limit and the monthly repayments, as shown by the signed agreement. No issues about the sale were raised during the term of the agreement.
  • The consumer chose to enter into a PCP (Personal Contract Purchase) agreement where there was a guaranteed future value placed on the car. This figure may be less than the car’s part-exchange value, which would give the consumer some money to put into a new deal, but there was no assurance that this would be the case.
  • There was a Personal Contract Hire offer at the time with £199 per month, but the price didn’t include additional extras, and there was no option to own the vehicle at the end of term, which was something the consumer wanted as an option, as shown in the demands and needs statement. This is why the customer chose the PCP agreement.
  • We can’t comment on the discussion between the consumer and our sales agent, as this took place three years ago.
  • However, the consumer signed the agreement and was aware of the terms and conditions of the contract, meaning that we dispute the fact that they had been misled by us.

The adjudication outcome:

  • The Motor Ombudsman adjudicator reviewed the evidence from both parties, but couldn’t comment on the conversations that had taken place at the time of sale.
  • Therefore, she had to rely on the point-of-sale documents, which clearly set out the mileage limit, the type of agreement and monthly payments.
  • She said the documents were signed by the consumer, so was deemed to have accepted them and was bound by them.
  • As a result, the consumer’s complaint was not upheld, but the customer did not agree with this outcome and requested a final decision.

The ombudsman’s final decision:

  • The ombudsman said that it wasn’t possible to verify what discussions had taken place between the consumer and the sales agent, meaning reliance had to be placed on the documentary evidence.
  • She highlighted that it wasn’t clear if this agreement was the first time the consumer had entered into a finance arrangement, so it was entirely plausible that they may have misunderstood the benefits associated with the various finance agreements that were on offer.
  • The ombudsman explained that the type of agreement the consumer had entered into provided a guaranteed future value on the car. This simply meant that, at the start of the agreement, an assumption is made as to how much a car will be worth at the end of the finance term. This guaranteed future value is also the balloon payment the consumer would have to pay at the end of the finance term in order to fully own the car.
  • She said that, if the car is worth more than the guaranteed future value, then the consumer can use the difference to put towards the purchase of another vehicle on finance.
  • On the other hand, if the car is worth less than the guaranteed future value, then the customer can hand the car back and walk away from the agreement.
  • The ombudsman stated that, although this may have been misunderstood by the consumer, there was nothing in the point-of-sale documents which would suggest that the dealership had misled the customer.
  • Regarding the mileage limit, the ombudsman explained that this was clearly set out in the finance agreement and the consumer had provided no reasonable justification as to why the agent would suggest putting down a mileage limit of 6,000 and why the customer would agree to it knowing this was much lower than their actual annual mileage.
  • The ombudsman therefore did not uphold the complaint. This is because the overall cost of the car, balloon payment, monthly payments and excess mileage were clearly set out in the documents.
  • It was therefore the consumer’s responsibility to ensure the agreement was suitable for their needs and, by signing the document, they agreed to be bound by it.


  • Neither party responded to the final decision, and the case was closed.