American Car Payment Arrears and British Car Payments and how to claim compensation for FREE

15th November 2025

There is strong evidence that an increasing number of Americans are missing (or falling behind on) car payments, particularly in the subprime auto‐loan market. And this trend has broader implications for the U.S. economy.

What the Data Shows: Are More Americans Missing Car Payments?

Delinquency Has Risen Sharply

According to Fitch Ratings, 6.56% of subprime auto borrowers were at least 60 days past due on their payments (as of January 2025).

Bloomberg reports this is the highest rate in more than 30 years.

Broader delinquency: a LendingTree study found 5.1% of Americans with auto loans are delinquent on at least one auto loan account.

Equifax data (March 2025) shows the "severe delinquency rate" (60+ days past due) is 1.58% of auto-loan balances.

Repossession Is Increasing

There's a surge in car repossessions: The Guardian reports U.S. repossessions reached 1.73 million vehicles in 2024, the highest since 2009.

These defaults are hitting especially hard among lower-income / subprime borrowers.

Cost Pressures Are High

Average monthly car payments are rising: reports cite more than $750/month on average.

New car prices are very high, and interest rates on auto loans have also gone up.

Longer loan terms are common (many buyers are stretching loans to 7+ years), which can make monthly payments more affordable — but also increase risk.
Fortune

What Does This Mean for the U.S. Economy?

This trend is concerning for several reasons. Here's what the risks and potential economic implications are:

Financial Stress on Lower-Income Households

The rise in delinquencies is most acute among subprime borrowers — typically lower-income consumers.

As these households struggle with car payments, they may cut back on other spending (discretionary or even essential), which could weigh on consumer demand more broadly.

Rising Risk for Lenders and Auto-Financing Businesses

Higher default rates mean auto lenders face growing credit risk. If defaults continue to rise, lenders may tighten credit, make loans harder to get, or charge higher rates.

The surge in repossessions could also lead to losses on repossessed vehicles, especially if used-car prices decline (a risk if supply floods the market).

Credit Market Stress

The auto loan market's stress could be a canary in the coal mine for consumer credit: if people are struggling to make payments on something as "essential" as a car, that points to deeper financial strain.

This could feed into other credit problems (e.g., credit card defaults, loan write-offs), which would affect banks and financial institutions.

Impacts on Economic Stability / Growth

If auto loan delinquencies rise significantly, that could drag on consumer spending, which is a major part of U.S. GDP.

There might also be knock-on effects: lower consumer confidence, tighter credit conditions, and more cautious lending behaviour.

Repossession waves could also have social implications (loss of transport, for example, which could affect employment for those who rely on cars).

Signal of Broader Affordability Crisis

The fact that average car payments are so high, combined with rising loan terms, suggests an affordability squeeze. Consumers are stretching themselves to afford vehicles, which may not be sustainable in the long run.

This is compounded by inflation, higher living costs, and possibly stagnating wage growth — making debt servicing more painful.

But It's Not All Doom and Gloom — Some Nuance

Prime borrowers are less affected: The worst delinquencies are among subprime borrowers; consumers with stronger credit seem more insulated.

Loan write-offs are not exploding (yet): According to Equifax, auto loan write-off rates are relatively stable.

Repossessions don't always mean systemic collapse: While high repossession is alarming, it doesn't automatically mean a financial crash; however, sustained pressure could lead to a more serious credit problem.

More Americans are missing car payments, especially among riskier (subprime) borrowers. This is a warning sign: it suggests increasing financial strain for lower-income households and rising risk for auto lenders. If the trend continues, it could have ripple effects across the credit market and consumer spending, potentially slowing economic growth or increasing financial instability.

What's Happening in the UK Car-Loan / Finance Market

Major Mis-Selling Scandal (Commissions)

The FCA (Financial Conduct Authority) is setting up a compensation scheme for people who took out car finance deals (PCP, HP etc) between 2007 and 2024/2025.

The issue: "discretionary commission arrangements" (DCAs), where dealers could set higher interest rates in order to earn higher commission. Many customers weren't clearly informed about how dealer commissions worked.

The FCA estimates that around 14.2 million such finance agreements might be eligible for redress.

Average compensation per deal is expected to be about £700.

The FCA’s compensation scheme is expected to begin in 2026.

Court Rulings and Legal Risk

There was a Court of Appeal ruling (2024) saying some commission-payment arrangements were unlawful.

But in 2025, the UK Supreme Court largely sided with the lenders on key points, limiting how big the compensation bill could be.

As a result, the FCA is proposing a more limited redress scheme.

Rising Consumer Complaints

Complaints to the Financial Ombudsman Service about motor finance have nearly tripled in a year.

Many complaints centre on lack of transparency about commission, unfair dealer behaviour, or consumers being steered into more expensive deals.

Car Finance Market Activity

According to the Finance & Leasing Association (FLA), new car finance volumes are growing again (e.g., +5% in June 2025 vs June 2024).

But there is volatility: in April 2025, consumer car finance new business volumes fell by 5% compared to April 2024.

The FLA is urging customers who are worried about meeting payments to talk to their lender early.

Financial Vulnerability

In the FCA’s Financial Lives 2024 survey, many consumers reported financial difficulty or getting credit at high rates.

That suggests there is some risk of payment stress, but the survey doesn’t directly say how many are defaulting on car loans specifically.

Comparison with the U.S. Situation

In the United States, the concern is very much about rapidly rising delinquencies: many more people are missing monthly payments, especially among subprime borrowers.

In the UK, the biggest headline risk right now is not (so far) a surge of people defaulting en masse, but rather a mis-selling scandal that could lead to large compensation payments from lenders.

That doesn’t mean default risk is zero in the UK — but the public / regulatory concern is more about fairness of contracts than a near-term debt crisis in the used car-loan market (at least based on publicly available data).

What Does This Mean for the UK Economy / Financial System

Cost to lenders: If compensation is paid to millions of consumers, lenders could face a very large bill.

Consumer trust risk: This mis-selling scandal could undermine trust in car finance, and some consumers may be more cautious about taking on loans in future.

Regulatory risk and tighter rules: The FCA is clearly taking this seriously; there may be more regulation, disclosure requirements, or restrictions on how car finance is sold going forward.

Credit risk: If more people struggle to repay car finance (especially if interest rates rise or household finances tighten), lenders could face higher default risk in future.

Market implications: A compensation scheme that’s too costly could push some finance companies to raise rates, reduce lending, or pull back, which could make it harder for consumers to finance cars.

Bottom Line

Yes, there are problems in the UK car finance market — but they’re not exactly the same as the U.S. car-payment default wave.

The main issue in the UK is mis-selling, particularly undisclosed dealer commissions, rather than a sudden, sharp rise in missed payments.

That said, there is some stress: more complaints, regulatory scrutiny, and potential financial burden on lenders — which could feed into broader credit risk if things worsen.

Mis-Selling / Redress Risk

The bigger risk in the UK appears to be historic mis-selling, not a surge in non-payments: the FCA is planning a compensation scheme related to "discretionary commission arrangements" (DCAs) between 2007 and 2024.

The scheme could cost up to £9bn-£18bn according to reports.

The "mis-selling" issue means many consumers might be overpaying, but that’s financially different from being unable to make the monthly payments altogether.

What should UK residents do if they feel car loans were missold

If someone in the UK believes they were mis-sold a car-finance agreement (PCP, HP, or a loan arranged through a dealer), there is a clear process they can follow. Here is the official, safest, and most effective route:

1. Gather Your Evidence

Collect anything that relates to the deal:

The finance agreement

Emails or messages from the dealer

Advertised APR or "special offers"

Notes of what you were told in the showroom

Any documents showing commission, fees, or interest rates

Credit-check documents (if you feel you were placed into a loan you could not reasonably afford)

You do not need a perfect set of documents — lenders must keep copies.

2. Identify the Type of Mis-Selling

The most common mis-selling issues are:

a) Discretionary Commission Arrangements (DCA)

Dealer earns more commission by increasing your interest rate

Not disclosed properly

At the centre of the UK-wide compensation scheme expected to start in 2026

b) Lack of Explanation of Key Terms

Balloon payment was not properly explained

Guaranteed Future Value (GFV) misunderstood

Mileage limits not explained

Early termination rules unclear

c) Affordability

You were given a loan despite it being unaffordable based on income

Income/expenditure checks not completed properly

d) Pressured / misleading sales

Told "everyone gets the same rate"

Told "this is the only option”

Told "you must take finance to get the car”

3. Complain to Your Lender (NOT the dealer first)

Every lender has a complaints department.

You can say something simple like:

“I believe my car finance agreement was mis-sold, particularly regarding the commission structure / interest rate / affordability / explanation of key terms.
Please treat this as a formal complaint.”

They have:

8 weeks to respond

They must investigate and give a final decision

If the agreement involved undisclosed commission, include this directly — it strengthens the case.

4. If Unhappy With the Response → Go to the Financial Ombudsman Service

The Financial Ombudsman Service (FOS) is:

Free

Independent

Legally binding on lenders

You can escalate your complaint if:

You get a poor response

You do not hear back within 8 weeks

You disagree with the outcome

The FOS has already upheld many car-finance mis-selling complaints.

5. Don’t Pay for Claims Companies (unless you choose to)

You do not need:

No-win/no-fee companies

Solicitors

"Car finance claim services"

These often take 20-40% of your compensation for work you can do yourself for free.

Use the lender + Ombudsman route first.

6. Keep an Eye on the FCA’s 2026 Compensation Scheme

The upcoming scheme (related to the discretionary commission scandal) is expected to:

Cover agreements from roughly 2007-2024

Automatically review many cases

Potentially compensate millions of drivers

If your case involves dealer-discretionary commission, you may be automatically reviewed when the FCA scheme formally begins.

7. Do NOT stop paying your car loan

Stopping payments can:

Damage your credit score

Lead to repossession

Reduce your chances of redress

Filing a complaint does not freeze your payments unless your lender explicitly agrees.

If you can’t find your car-finance loan agreements, don’t worry — you can still make a mis-selling complaint. UK lenders are legally required to keep records, and you can request them at no cost.

Here’s exactly what to do:

1. Ask the lender for a copy of your agreement

You can request this free of charge under:

Consumer Credit Act (CCA) – for hire-purchase and PCP agreements

Data Subject Access Request (DSAR) – for all personal data relating to your loan

You do not need account numbers — just give them:

Your full name

Address(es) you lived at during the loan

Approximate years of the agreement

Car make/model if you remember it

They can find the loan from this information.

Example message you can send to the lender:

Subject: Request for Copy of Car Finance Agreement

I believe I previously held a car finance agreement with your company.
I do not have my documents and I need a full copy of the agreement and all associated information.

Please treat this request as:

a Section 77/78 Consumer Credit Act request for the loan agreement, and

a Data Subject Access Request (DSAR) for all personal data you hold relating to my finance.

My details are:

Full name:

Date of birth:

Previous address(es):

Approximate date of agreement:

Car make/model (if known):

Thank you.

2. How long will it take?

CCA agreement copy: usually within 12 working days

DSAR: legally must be completed within 1 calendar month

Most lenders send much more than just the contract — often:

Credit checks

Dealer commission details

Notes of conversations

APR calculations

Any complaints recorded

This can help you spot mis-selling.

3. Cost

Free (DSAR)

£1 fee sometimes for a CCA copy, but many lenders no longer charge it

No other charges allowed

4. If the lender says they can’t find your agreement

Even then, you still have rights.

If a lender cannot produce:

The signed agreement

Or key details of the agreement

Then the:

Agreement may be unenforceable, and

The Ombudsman may still uphold your mis-selling complaint

This doesn’t mean you stop paying — but it strengthens your case.

5. If you don’t know who your lender was

You can still try these:

✔️ Check your credit report

Use:

Experian

Equifax

TransUnion

Look for:

“Black Horse”

“Santander Consumer UK”

“BMW Financial Services”

“Volkswagen Financial Services”

“MotoNovo”

“Ford Credit”

“Toyota Finance”

etc.

Your old account will be listed even if closed.

✔️ Contact the dealership

They often keep sales records for years.