Do I have to service my car with the dealer if I have a PCP?

Car finance advice Car Maintenance
What are the servicing requirements of a car with PCP car finance?

The popularity of PCP car finance has allowed car manufacturers to be sneaky when it comes to forcing you to have your car maintained by their dealer service network.

Today’s #AskTCE topic comes from Paul on Twitter: “I have a car on PCP, do I have to use the dealer service centre for all services or can I use an independent garage?”

We have previously discussed your car servicing rights, which allow you to have your car serviced outside the manufacturer dealer network without losing your warranty, but there is another issue to consider if your car is financed using a PCP.

Part of the attraction of PCP car finance is that the finance company will guarantee that the value of the car at the end of the term will at least cover the outstanding settlement figure. This is called the Guaranteed (Minimum) Future Value (GFV or GMFV) and it means that your worst-case scenario should be that you can simply give the car back with nothing more to pay.

Choose the right garage to service and repair your car - The Car Expert

However, the GFV is dependent on three requirements that you must meet:

  1. You must not exceed your agreed mileage over the duration of the term
  2. The car must not require any repairs beyond normal wear and tear
  3. You must have the car serviced by the official dealer network

It’s the last item that we are concerned with today. The GFV is a value based on a car with no damage, limited mileage and a full manufacturer service history. If you do not have a FULL manufacturer service history (on time, every time, by an official dealership), then the finance company can either refuse to honour the GFV or charge you a hefty penalty fee.

What is a dealer service history worth?

Their argument is simple: the GFV is based on a car with a perfect service history, and a car with a full manufacturer service history is worth more than one with an incomplete history, or with services done elsewhere. To some extent, this is true. However, the penalties that finance companies are able to apply seem excessively harsh, especially since a dealer service is not necessarily a better service than one performed by a good independent garage.

Some manufacturer finance companies will charge you more than £1,000 if even one service is not in accordance with the official requirements (even if it is done by the dealer but not on time), with the charges ratcheting up quickly if multiple services are not done by the book. This seems disproportionate to the real effect on a used car’s value, especially if servicing is done by a qualified garage but not strictly by the wording of the PCP agreement.

Does a dealer have to service your car if you have a PCP?

Two identical three-year-old cars. One has a full dealer service history, one has a full service history by a specialist independent garage. Real-world value is about the same, but the finance company can penalise you severely if you don’t service with the dealer.

What if I don’t want to give the car back at the end of the term?

If you are not claiming the GFV at the end of the agreement (ie – if you are not giving the car back to the finance company), then you don’t have to worry about where you have it serviced. So if you want to settle the outstanding finance and keep the car, or sell it privately, or part-exchange it for something else, you can have your car serviced wherever you like and the only downside will be a slightly diminished resale value.

However, if your car is worth less than its settlement figure (negative equity), you won’t have the security of the GFV to cover you. This means that you will have to pay the negative equity out of your own pocket. With national used car values continually sliding downwards each year, you run the very real risk of having to cough up thousands of pounds to clear your finance because you have invalidated your GFV.

Be aware of what you are signing up for!

This scenario is cropping up more and more around the country, and part of the problem is that the terms and conditions have not been explained by the dealer at the point of sale. The other problem, as we have alluded to in previous articles, is that buyers are notoriously lazy when it comes to reading contracts before signing them. The result is that a customer is not aware that they can no longer claim their GFV, and it ends up costing them dearly.

Stuart Masson

Stuart is the Editor of The Car Expert, which he founded in 2011, and our new sister site The Van Expert. Originally from Australia, Stuart has had a passion for cars and the car industry for over thirty years. He spent a decade in automotive retail, and now works tirelessly to help car buyers by providing independent and impartial advice.

24 Comments

  1. I've been saving up for a car for a very long time and finally have enough. Now that I have the money, I'm trying to learn about the car buying process. This helped me understand the warranty side of it all, and I can't wait to go find me a car now.

    Reply
  2. Much needed information shared,Thanks Keep posting!

    Reply
  3. These schemes appear to be designed to circumvent warranty laws. Is this even legal?

    Reply
    • Stuart Masson

      Hi Jagfan. The finance companies are correct that a car with full manufacturer service history will be worth more than one without, so they can insist on it to claim the GMFV. They are not technically circumventing the rules because they are not impinging on your warranty rights – merely the car’s value at the end of the agreement.

      What is certainly debatable is the penalty fees charged for not having your car serviced with the dealer – in some cases, over £1,000 per service.

  4. I have recently looked in to bussiness contract hire, and have been told that the van deal I want is only available with maintenance inc. no un-maintained option. this is an extra £120 deposit and £20 per month for basically replacing a bulb if it goes and new tires now and then! Is that legal for them to force me to buy the extra cover? Anyone know?

    Reply
    • Stuart Masson

      Hi Patrick. I’m sure there are other leasing companies who would be able to offer you a quote without maintenance.

  5. My niece has a pcp on her car, but is now being told it’s worth less than she owes? What are her options? Also does she have to go back to the dealer she got the car off in the first place or can she go to another dealer

    Reply
  6. hi your article is invaluable to me today, thank you. Also the comments which give a little more insight to what goes on with PCP.

    My 7 month old Mazda 3 is showing oil change needed. I contacted the garage where I purchased it and was told they would do it for £180. I commented, politely, that is excessive for an oil change and why is it so much?

    Turns out, even though car not due annual or mileage service yet, they would do it at the same time. I asked, can you not just do the oil change? That would usually costs around £60 at local garage, not dealership. But I was told that is what the first service is.

    This must be wrong because at first service they would certainly (I hope) do more than just change the oil e.g. filter check diesel particulate filter etc.

    I am concerned at being told the warranty would be invalidated if I go elsewhere to get the car serviced,, but from what you have written, seems it is correct.

    So they got you trapped, rock and hard place. Go elsewhere, lose the warranty and be penalised at end of PCP term or, go to the dealership and pay big bucks for what you could get cheaper locally.

    I guess this is one of the reasons we should all, carefully (very carefully!) check the T&C before taking on PCP.

    Meantime, about to book car in for that ‘service’ and hope that I can save enough pennies before it gets done!

    70+yrs female writing this btw. So forgive my rambling! Thanks for your assistance.

    Reply
    • Stuart Masson

      Hi Jennifer. I’d check with another Mazda dealer as a first step, and see if they give the same answers.

      Under normal driving, the car should not be losing enough oil in seven months to trigger a warning light. It may just need a top-up of oil. Dealers will always default to trying to get you in for as much work as they can charge you for…

  7. my PCP car needs new tyres. Do i need to purchase these through the dealer. There is scope to return the car to original dealer when contract expires.

    Reply
    • Stuart Masson

      Hi Jen. No, you definitely don’t need to buy tyres from the dealer (which is lucky, because a car dealer is usually the most expensive place in the world to buy tyres). As long as the tyres are suitable for that model car, you can buy them anywhere.

  8. Hi got a new car with CPC finance end Nov 2016. It is not quite 6 months and 5,000 miles they are saying it’s due it’s first service as it was registered in June 2016. This doesn’t seem fair as I haven’t actually had it for the year surely it should start from when a signed for the car?

    Reply
    • Stuart Masson

      Hi Gill. If it was registered in June, then you didn’t buy it new in November. It was most likely a pre-registered car, which is basically a used car with no real mileage. The warranty, roadside assistance (if applicable) and service counter all start from date of registration, so if the first service is due at 12 months, then it will be due in June. In that respect, it’s no different to buying any other used car that’s five months old.

  9. I need repairs doing on my PCP car, do i need to take these to the original dealer? will it effect the warranty if i go elsewhere?
    There are wires that have been damaged, the original dealer says they can only replace these which will cost a lot whereas other garages have stated they can repair these rather than replace them which would cost less, not sure where i stand with this situation and the warranty?
    Thanks!

    Reply
    • Stuart Masson

      Hi Zoe. Servicing for your vehicle needs to be done at an official service centre for the vehicle brand, but repairs are not usually specified in a finance agreement. The car will need to be kept in good condition, which means that the finance company would expect everything to work correctly.

      If a third-party repair fails to fix the problem, there is the risk that any warranty you have could be voided. But without knowing the specifics of the problem, I wouldn’t know what the likelihood of this is.

  10. I have a Fiat 500 on a hire purchase scheme. I was rushed at the time of my last service and I got it done at a local garage. I didn’t realise the above. What would be the best way to proceed?

    Reply
    • Stuart Masson

      Hi Grace. If you have a hire purchase agreement, then you don’t have a guaranteed future value and therefore there is no requirement to have the car serviced by a Fiat dealer.

  11. Hi Stuart. I have an Audi A1 on PCP that is now due a service. I am curious to know whether I am obliged to go through the Audi Network (which works out expensive) or can I use an independent outlet who use genuine Audi parts and claim that they don’t invalidate your Audi warranty. Thanks.

    Reply
    • Stuart Masson

      Hi Lewis. As the article clearly states, if you intend to give the car back at the end of the agreement and claim the guaranteed future value, then you need to comply with the finance company’s T&Cs. This will usually include a clause saying that the car needs to be serviced by an official manufacturer service centre.

      It’s a finance company requirement, not a warranty requirement. Your warranty rights are unaffected if you have the car serviced elsewhere, as long as the workshop follows the correct procedure and uses genuine parts where specified.

  12. My Citroen is on a PCP and needs new brakes. Dour I have to go to Citroen to get new brakes or can I go anywhere?

    Reply
    • Stuart Masson

      Hi Jayne. No, you can go anywhere. The only requirement is that the garage uses the correct-spec parts. Brakes are wear-and-tear items, like tyres or a battery, so you can replace them wherever you like as long as the replacements are suitable for your vehicle.

  13. Thankyou very much Stuart Masson for you answer.

    Reply
  14. Hi – I have a Service pack up to 50000 miles on my BMW which I now intend to keep (PCP ends Feb 2021) after paying a lot per month, But my BMW Warranty will end in Jan 18 – PCP another person – Do I have to have another BMW Warranty as really expensive or can I shop around ?
    Thanks

    Reply
    • Stuart Masson

      Your PCP is not connected to warranty, so you can shop around for an aftermarket warranty, or not purchase one at all if you don’t want to.

What are your thoughts? Let us know below.

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