---
title: "Calculating Your Potential Refund (A Deep Dive into the Math)"
canonical: "https://carfinancerefundletter.co.uk/blog/calculating-potential-refund"
date: "2025-11-26T09:00:00.000Z"
---
# Calculating Your Potential Refund (A Deep Dive into the Math)

_Published: November 26, 2025_ · _2 min read_

How is compensation actually calculated? We explain the formula used to determine how much you are owed.

**Canonical:** [HTML article](https://carfinancerefundletter.co.uk/blog/calculating-potential-refund)

---

While every claim is unique, the methodology for calculating refunds is becoming standardised. Here is how the numbers work.

## The Formula
**Refund = (Interest Paid - Interest That Should Have Been Paid) + 8% Statutory Interest**

## Step 1 - Determine the "Fair" Rate
The lender must disclose what the "Base Rate" was at the time. Let's say you paid **9%**, but the base rate was **4%**. The "unfair" portion is the **5%** difference.

## Step 2 - Recalculate the Loan
They run a simulation of your loan as if it had been at 4%.
- At 9%, you might have paid £2,000 in total interest.
- At 4%, you would have paid £900.
- The difference is **£1,100**.

## Step 3 - Add Statutory Interest
You were deprived of that £1,100 for years. The courts award **8% simple interest per year** on that money as compensation.
If the loan was 4 years ago, that could add another £300-£400 to your total.

## Variables
- **Loan Size:** Larger loans generate larger refunds.
- **Duration:** Longer loans accrue more compound interest.
- **Date:** Older loans have accrued more statutory interest.