It could also have economic consequences, with many key workers including nurses, teachers, electricians and plumbers relying on cars to do their jobs.
Several major lenders have been forced to pause loans. Mann Island, MotoNovo, V12, Zopa, Close Brothers, Secure Trust Bank and Northridge have all pulled out of the market in the last 72 hours.
Honda Finance Europe, the lending arm of Honda, has also banned some drivers who had financed their cars with Honda from collecting their vehicles.
The lender has also paused payments to car dealers linked to its financing arrangement, and stopped drivers collecting their cars, according to Car Dealer magazine.
Shock court judgement
The move follows the shock Court of Appeal judgement last week, which effectively ruled that car salesmen now have a “fiduciary duty” to inform customers about bonuses, commissions and fees they receive from lenders.
This means they have to put the needs of the customer ahead of their own, which has implications for the payment of commissions.
Up until now, many customers were in the dark about fees paid to dealers – an issue that has prompted the courts to take action.
Treasury ministers met with regulators at the Financial Conduct Authority (FCA) and the Finance & Leasing Association (FLA), which represents lenders, on Tuesday to discuss how to address the matter.
The FLA is urging the City regulator to extend a pause that the regulator put in place on dealership bonus payments, known as discretionary commission arrangements (DCA).
Because the court ruling said customers had to be informed about all payments, not only bonuses but also flat fees paid to dealers, there are fears lenders could face a deluge of complaints from law firms.
The FCA originally paused complaints on DCAs until December 2025 and Nikhil Rathi, the FCA’s chief executive, said on Tuesday it was considering expanding the pause to all types of payments.