It's a nightmare scenario: you've bought a faulty car, you're ready to reject it, and then you discover the dealer has gone into administration or simply disappeared. Are you stuck?
Not necessarily. Here are your options.
Option 1: Claim Against Your Finance Company
This is usually your best route if you bought on finance.
Section 75 Protection
If you paid any part of the purchase using a credit agreement (HP, PCP, or credit card), Section 75 of the Consumer Credit Act makes the finance company jointly liable.
This means:
- The dealer's insolvency doesn't affect your claim
- You can pursue the finance company directly
- They have the same obligations as the dealer would have had
How to Claim
- Write to the finance company explaining the fault
- Reference Section 75 and the Consumer Rights Act 2015
- State that the dealer is no longer trading
- Request a refund or resolution
What They Must Do
The finance company cannot refuse because the dealer has gone. They are independently liable under Section 75 and must:
- Investigate your complaint
- Offer a remedy (refund, repair, compensation)
- Handle the situation as if they were the dealer
If They Refuse
Complain to the Financial Ombudsman Service. Finance companies hate FOS complaints and often settle to avoid them.
Option 2: Credit Card Chargeback
If you paid any amount by debit or credit card, you may be able to request a chargeback.
What Is Chargeback?
Chargeback is a process where your card provider reverses a transaction when goods weren't delivered as promised.
Limitations
- Usually must be claimed within 120 days
- Not a legal right (unlike Section 75)
- Bank has discretion
- May only cover the card payment portion
How to Request
- Contact your bank's dispute department
- Explain the situation
- Provide evidence of the fault
- Show the dealer is no longer trading
It's worth trying even if time has passed – banks sometimes make exceptions.
Option 3: The Insolvency Process
If the dealer has formally gone into administration or liquidation, there's a process for creditors.
Register as a Creditor
- Find out who the administrator/liquidator is
- Register your claim with them
- Provide evidence of your loss
Reality Check
Unsecured creditors (which includes customers) are usually paid last and often receive pennies in the pound – or nothing at all. This shouldn't be your only strategy.
Proof of Debt
You'll need:
- Invoice/receipt
- Evidence of the fault
- Any correspondence with the dealer
- Details of your loss
Option 4: Outstanding Finance on the Car
If there's outstanding finance on the car you bought (i.e., the dealer sold you a car they didn't fully own), you have different protections.
You're Protected
Under hire purchase law, if someone sells goods they don't own, and you buy in good faith from a dealer, you get good title. The finance company must pursue the dealer, not you.
What to Do
- Contact the finance company that has the outstanding balance
- Explain you purchased in good faith from a dealer
- They cannot repossess the car from you
This is separate from any rejection claim – it's about protecting your ownership.
Option 5: Trading Standards
Report the dealer to Trading Standards, even if they've closed.
Why Bother?
- Creates an official record
- May trigger investigation into directors
- Could support any future claims
- Helps protect other consumers
Director Disqualification
If directors have been trading irresponsibly, they can be disqualified from running companies. Your report contributes to this process.
Option 6: Manufacturer Warranty
If the car is still under manufacturer warranty, the dealer's insolvency doesn't affect this.
What's Covered
Manufacturer warranties typically cover:
- Major mechanical failures
- Factory defects
- Recalls
How to Claim
- Contact the manufacturer directly
- Or visit any franchised dealer for that brand
- Warranty travels with the car, not the selling dealer
Limitations
Manufacturer warranties don't cover everything – they're not a substitute for your consumer rights. But they can help with specific covered faults.
What If the Dealer Just Disappeared?
Some "dealers" simply close up shop and reopen under a new name, or were never properly registered.
Find Information
- Check Companies House for director details
- Search for trading names and linked businesses
- Look for the same people operating elsewhere
Personal Liability
In some cases, individuals can be held personally liable if:
- They were trading fraudulently
- The company was a sham
- They made personal misrepresentations
This is complex and may need legal advice.
Report It
- Action Fraud if you suspect criminality
- Trading Standards for consumer protection breaches
- DVLA if there are registration issues
Protecting Yourself in Future
Before Buying
- Check the dealer exists on Companies House
- Look for established business addresses
- Read reviews and check how long they've traded
- Be wary of deals that seem too good
Payment Methods
- Always pay some amount on credit card (for Section 75)
- Avoid cash-only dealers
- Keep finance documentation safe
Documentation
- Get everything in writing
- Keep all receipts and agreements
- Document the car's condition at purchase
- Maintain a correspondence file
Priority Order for Claims
If the dealer has gone bust, work through these options:
- Finance company (Section 75) – Most likely to succeed
- Credit card chargeback – Quick if within time
- Manufacturer warranty – For covered defects
- Insolvency process – Register but don't rely on it
- Report to authorities – For the record and future prevention
The Bottom Line
A dealer going bust doesn't mean you've lost your money. If you bought on finance, you almost certainly have a route to recovery through Section 75.
The finance company cannot hide behind the dealer's insolvency – they're independently liable. This is exactly the situation Section 75 was designed for.
Don't give up. Start with your finance provider and work through the options.
Dealer disappeared after selling you a faulty car? Check if we can help – we specialise in recovering money in difficult situations.
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