How Much Compensation for Mis-Sold Car Finance Will I Get?

What is the average payout for mis-sold car finance?

The FCA's average is £829 per eligible agreement, across the 12.1 million agreements it estimates are eligible under its final rules of 30 March 2026. The FCA rounds it to about £830 on its consumer page. It is an average across every agreement the FCA expects to be eligible, not a figure for any one person.

Older pages and videos still quote £700. That was the FCA's estimate when it consulted in October 2025, across 14.2 million agreements. The final rules changed the method in several places, including a bigger APR cut for agreements before 1 April 2014, three caps and a £0 rule for low APRs. The FCA's average under those rules is £829. These FCA car finance redress scheme rules, written to compensate borrowers treated unfairly, apply to every lender in the same way.

No one has been paid under the scheme yet. Until the legal challenges end, lenders do not have to work out or pay compensation under the scheme (FCA, 2 July 2026). The average hides a wide spread, and five features of an agreement decide where yours falls.

Why do some agreements get more, some less and some nothing?

Five things move an estimate: the commission, the APR, the amount and length of the agreement, the date it started, and the time since then. Three caps can then lower the figure, and four rules set it to £0.

What makes an estimate bigger

Each of the five feeds one of the two figures in the FCA's method, or the interest added to them:

• More commission. Most results average the commission plus interest with an overcharge figure, so more commission raises the estimate.
• A higher APR. The overcharge figure compares your payments with payments at a lower APR, so a higher rate leaves a bigger gap.
• More credit over a longer term. A larger amount borrowed and more monthly payments both widen that gap.
• An earlier start date. Agreements before 1 April 2014 use a 21% APR cut instead of 17%, which the FCA says adds £31 to the average for those cases (PS26/3).
• Time. Compensatory interest runs until your lender makes its decision, so the interest part grows every year.

The largest results come from very high commission: at least 50% of the total charge for credit and 22.5% of the amount borrowed, with a discretionary commission arrangement or a tie. All the commission comes back with interest in those cases, and no caps apply. The FCA expects about 90,000 people to be in this group.

What keeps it lower: the three caps

Around 1 in 3 results are capped, the FCA says. The average is cut to the lowest of three limits. They are 90% of the commission plus interest, the extra you paid compared with the lowest 5% of APRs for that year, and everything you paid above the amount borrowed.

When the answer is £0

Four rules give £0, even for an agreement inside the scheme's dates:

• commission of £150 or less, or £120 or less for agreements before 1 April 2014;
• an APR of 0%;
• an APR at or below the lowest 5% of APRs for the year the agreement was made, for example 6.90% in 2007, 2.90% in 2016 and 3.90% in 2024;
• no discretionary commission arrangement, no tie and commission below the high commission level.

The lowest-5% rule alone removes about 64,000 agreements, the FCA says, though it does not apply to the very high commission cases above.

Three groups sit outside the scheme altogether: leases (personal contract hire), agreements taken out before 6 April 2007 or after 1 November 2024, and borrowing above the FCA's high value limit for the year. That limit runs from £38,000 in 2008 to £82,000 in 2024, and does not apply to a vehicle built or adapted for a disabled driver or passenger.

Cases with high commission only, no discretionary arrangement and no tie, that ended before 26 March 2020 with the commission clearly disclosed, are likely to be out of time (PS26/3). Each of these rules is a step in the FCA's calculation.

What can reduce the amount you receive

Three things can cut what reaches you after your lender works out the figure:

• Arrears. Your lender can take unpaid arrears on the same agreement off the amount (CONRED 5.4.24R), and you can object where the arrears are disputed.
• Bankruptcy or an IVA. Compensation can belong to your trustee or IVA supervisor, so tell your lender and your insolvency practitioner, the FCA says.
• Fees. A claims company or law firm can take up to 36% of your compensation, including VAT, the FCA says; complaining yourself costs nothing.

Tax on the interest part is covered below.

How car finance compensation is calculated

Car finance compensation is calculated by averaging two figures, your commission plus interest and the extra you paid compared with a lower APR plus interest, then cutting the result to the lowest of three caps. The rules are CONRED 5 for agreements from 1 April 2014 and CONRED 6 for earlier ones. Our calculator methodology page lists every constant and the tests the calculator must pass.

Step 1: the scheme your agreement is in

The start date decides the scheme, and the scheme sets two of the numbers. Agreements from 6 April 2007 to 31 March 2014 are in Scheme 1 (CONRED 6), which cuts the APR by 21% and treats commission of £120 or less as fair. Agreements from 1 April 2014 to 1 November 2024 are in Scheme 2 (CONRED 5), which cuts the APR by 17% and treats commission of £150 or less as fair. Any motor vehicle financed on PCP, hire purchase or conditional sale counts, including cars, vans, motorbikes and campervans.

Step 2: an arrangement that was not disclosed

Compensation needs at least one of three arrangements:

• a discretionary commission arrangement (DCA), where the dealer could set your interest rate and earned more commission for a higher rate;
• high commission, at least 39% of the total charge for credit (the interest and fees) and at least 10% of the amount borrowed;
• a tie, where the dealer had to offer the lender's finance first, or only that lender's finance.

The rules presume the relationship was unfair, and that you lost out, where the arrangement was not adequately disclosed. Lenders can rebut that presumption in some cases, for example by showing you knew about the arrangement, that a tie was never used or that no better deal was available. The last of those cannot be used where there was a DCA.

Step 3: the two figures and their average

Your lender works out two figures and takes the average:

1. 1
   The commission figure: the total commission payable, plus compensatory interest from the day the agreement started.
2. 2
   The overcharge figure: your payments minus the payments you would have made at a lower APR, plus interest on each difference from the date you paid it. The lower APR is your APR × 0.83 from 1 April 2014, or × 0.79 before. The FCA's own example turns an APR of 10% into 8.3%.
3. 3
   The average: half of the two figures added together. The FCA calls this the "hybrid remedy".

Where there was a DCA and the lowest rate the dealer could have offered is higher than the lower APR, the lender uses that lowest rate instead. The lender uses your actual or contractual payments. Where those records are missing, the rules rebuild the payments from the amount borrowed, the APR and the length, with the APR divided by 12 as the monthly rate.

Compensatory interest

Compensatory interest is simple interest at the yearly average Bank of England base rate plus 1 percentage point, with a minimum of 3% a year. The rules fix the rate for every year from 2007 to 2028, using projections for 2026 to 2028, and you cannot challenge the rate (PS26/3).

The FCA's own worked example shows the effect. A £10 overpayment made on 1 April 2014 and refunded on 31 December 2025 earns £4.33 of interest at these rates. The same £10 earned £3.19 at the lower rates the FCA consulted on (CP25/27 Table 9). Interest runs to the date your lender sends its decision, and the lender recalculates it to the date it pays.

Step 4: the three caps

Your estimate is the lowest of the average and three caps:

1. 1
   90% of the commission figure;
2. 2
   the extra you paid compared with the lowest-5% APR for your year (for example 3.20% in 2017), plus interest;
3. 3
   everything you paid above the amount borrowed, not counting your deposit, plus interest.

Lenders apply the third cap where they hold your actual payments. A high APR with low commission is where the 90% cap bites: the overcharge figure is large, but the commission figure sets the ceiling.

The exception: very high commission

Very high commission skips the average and the caps: all the commission comes back with interest. This route applies where commission was at least 50% of the total charge for credit and at least 22.5% of the amount borrowed, with a DCA, a tie or both. These are the cases closest to Mr Johnson's. The Supreme Court found his commission was 25% of the advance and 55% of the total charge for credit, and on 1 August 2025 ordered it paid to him with interest.

The method is not final. The grounds of the four legal challenges include the APR adjustment and the interest rate (FCA, 8 May 2026), and every figure on this page follows the rules as published on 30 March 2026.

Four agreements worked through the rules

The same rules give £2,557.64, £913.67, £499.02 and £0 on four agreements built from the FCA's rules, with interest worked out to 31 March 2027. None of them is a real case. Each one takes a different route through the method.

Every figure comes from our reference calculation of the FCA's rules, run on 8 October 2026. Each line is rounded to the penny and only the final figure is rounded in the calculation, so adding lines by hand can differ by 1p.

Step by step: the capped agreement

The 1 September 2017 agreement shows how a cap works: the average comes to £866.03, but 90% of the commission figure is lower, so the estimate is £499.02.

The homepage works through the 1 June 2019 agreement in the same way. Many public calculators skip some of these steps.

Why do car finance calculators give different answers?

Calculators disagree because most do not use the FCA's method, and because none of them knows your commission, the figure your lender holds. The shortcuts we found in public claim calculators include:

• 8% a year simple interest, a rate the scheme uses only when a lender pays late, not for the compensation itself;
• a flat share of the loan or the car price, which ignores both the APR and the commission;
• all the interest you paid, refunded in full, which no route in the scheme does;
• the £829 average multiplied by your number of agreements, which says nothing about your own agreement.

We put one agreement through the public calculators ranking for these searches on 8 October 2026: £15,000 at 9.9% APR over 48 months, from June 2017. The answers ran from £700 to £6,415.

Our calculator follows the FCA's method step by step when estimating your figure. It shows a range from £0 to the result at the FCA's high commission level when you leave the commission blank, instead of guessing one number. It works the estimate out at the lowest and highest rates you enter when you do not know your APR. It also shows the interest part of every figure separately, because that part is taxed.

Is car finance compensation taxable?

Car finance compensation is taxable where it is interest: the FCA says the interest part is generally subject to income tax, and lenders typically take basic rate tax off it before paying you (PS26/3). Under section 874(5A) of the Income Tax Act 2007, interest on compensation counts as yearly interest, so the payer deducts income tax at source (HMRC manual SAIM9115).

The interest part in the four agreements above is £907.64 of £2,557.64, £219.61 of £913.67 and £139.02 of £499.02. You can claim back tax taken above what you owe from HMRC with form R40. The rest of the payment refunds commission and overcharged payments, and we have not found HMRC guidance written for that part of car finance compensation.

Estimate your own agreement

Our calculator shows how much mis-sold car finance compensation the FCA's rules give on your own agreement, and lists every assumption behind the figure. Enter the start date, the amount borrowed, the APR and the length, and add the commission if your lender has told you it.

The free route: you can complain to your lender or use the FCA scheme for free, and the Financial Ombudsman Service is free if you disagree with your lender's answer. How to claim mis-sold car finance yourself, for free sets out each step.

A claims company or a law firm can do the paperwork for a fee, which the FCA says can be up to 36% of your compensation, including VAT. The guide to car finance solicitors and claims companies shows what that fee means on these examples.

Last checked 16 October 2026 against PS26/3, CONRED 5.4 and 6.4, the FCA's statements of 30 March and 2 July 2026, and our reference calculation script. Written by Tirion Oman. Spotted an error? Tell us through our contact page; the editorial policy explains how we correct figures.

Sources: FCA, scheme confirmed, 30 March 2026 · FCA, car finance claims · FCA, scheme partially suspended · PS26/3 · CONRED 5.4 · CONRED 6.4 · Supreme Court press summary, 1 August 2025 · HMRC SAIM9115