Most of the complaints we see about the quality of motor vehicles bought using consumer credit involve either hire purchase or a "point of sale loan" (a type of loan arranged through, and paid directly to, the supplier of the goods – and usually called "fixed-sum loan agreements" in the motor finance trade).

But we also see complaints from consumers who have bought vehicles using credit cards.
Under all these types of consumer credit, the loan, credit card or hire purchase business may be liable to put things right for the consumer if there is a problem with the quality of the vehicle. For hire purchase this is because the satisfactory quality of goods is a term of the hire purchase agreement. For fixed-sum loans, it is because the transaction is covered by section 75 of the Consumer Credit Act 1974.
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The facts
Where something goes wrong with a motor vehicle bought with credit, consumers often contact the garage they got the car from – as the first step in getting things put right. This can often be the sensible first step, to see whether things can be sorted out quickly and easily.

In the complaints we see, the consumer is often of the view that the garage did not put things right. Or there may be a series of problems, requiring repeated visits to the garage, going beyond what the consumer feels they could reasonably be expected to accept.
Where this happens, the consumer may be uncertain whether to pursue the complaint with the hire purchase or loan business or with the garage – and which business to complain about to us, if things remain unresolved.
We find that some hire purchase and loan businesses strongly encourage consumers to complain to the garage – sometimes suggesting (mistakenly) that any problem with the quality of the vehicle is not something they can help with.
Complaints about the quality of the vehicle can only be brought to the ombudsman service as complaints against the provider of the credit, not as complaints against the garage.

We also consider complaints against credit providers from consumers who say they bought a vehicle because the garage misled them about something important – for example, significantly understating the mileage of the vehicle. The garage itself will be covered by the ombudsman only in relation to any consumer credit activity it carries out. Usually this will be for credit broking (arranging the hire purchase or loan). This means we can consider complaints directly about the garage only if they involve the way the consumer credit was arranged – and are not about the quality of the vehicle obtained with the consumer credit.
Protection for new and used vehicles
Consumers are entitled to expect a brand-new vehicle to be free from even minor faults, including cosmetic ones.
But the position is different where a consumer buys a used vehicle. Vehicles suffer from wear and tear during their working life and the price of a used vehicle is expected to take this into account.

Regardless of its age and price, a used vehicle must have a working engine and be safe to drive, unless it is sold with a clear statement to the contrary.

Consumers are entitled to expect that all vehicles sold will be of "satisfactory quality". What constitutes satisfactory quality for a vehicle will usually depend on all the relevant circumstances, including:

• the cost of the vehicle
• the age of the vehicle
• the mileage of the vehicle
• what a reasonable person would expect of a vehicle of equivalent age and mileage
• any description given (for example, "excellent runner", "suitable for spares" or "restoration project")

When we consider the complaints that consumers refer to us, we use the available evidence to make our own assessment as to whether or not the vehicle was of satisfactory quality when it was sold.
Information and evidence
Depending on what has gone wrong, the type of information and evidence we are likely to ask for in cases involving the quality of motor vehicles may include, for example:

• a copy of the loan or hire purchase agreement – so that we can read its terms and conditions for ourselves,
• details of age, mileage and any other relevant features of the vehicle
• any additional documentation received from the garage or from the credit provider, at or before the time of sale
• any mechanic's report obtained during the course of the dispute
• photographs of the vehicle – where relevan
• the consumer’s own notes or records
• information about the consumer’s use of the vehicle
Putting things right
If we decide that the vehicle was not of satisfactory quality, and that the credit provider is liable for putting things right, we assess what should be done to put things right in the particular case. To do this, we will consider the individual facts and circumstances – and decide what the fair outcome should be.

For many of the cases we uphold, the fair outcome might include requiring the consumer credit business to do one or more of the following:

• allow the consumer to break the hire purchase agreement and give back the vehicle
• refund some or all of the payments made under the hire purchase agreement
• refund some or all of the cost of a vehicle bought with a fixed-sum loan
• pay some or all of the cost of repairs to the vehicle
• pay other financial loss caused to the consumer by the problems with the vehicle (for example, refund necessary taxi or car hire charges)
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