Help please re used car PCP and Warranty

Help please re used car PCP and Warranty

Postby firstseat on Tue Jan 03, 2017 3:13 pm

Hi Folks. New here. Just signed up with local SEAT dealer for a sweet used SEAT Ibiza.
I am buying on PCP and will be collecting the car tomorrow. (Might not now!!)
This morning the dealer advised me I have to have a "warranty" because of the finance deal!
Obviously this is more money and the first time I have heard of it.
I will be challenging the dealer tomorrow on "why" we weren't advised the car had no warranty included and why this additional expense was not explained........So my question.

Is it normal when buying a used SEAT that you "must" take out a warranty because of the Finance PCP Agreement?

Thanks if you can help.
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Joined: Tue Jan 03, 2017 3:03 pm


Re: Help please re used car PCP and Warranty

Postby SEAT RULE on Sat Oct 12, 2019 10:50 am

Hello and welcome to the Forum.

Blimey your original post is from 2017 so I presume you've sorted out your issue. But just to help out other people where possible here's some information below:

In a traditional hire purchase (HP) agreement, you pay off your entire borrowing in equal monthly instalments. But a PCP is different in that you have much lower monthly instalments followed by a very large final payment at the end. This final payment is often known as the balloon (also known as the Guaranteed Future Value) Meaning there'll be a lump sum at the end of your agreement that must be payed off.

If you borrow £20,000 on a hire purchase (HP) over four years, you would have 48 monthly payments of about £420. If you borrowed the same amount on a PCP over the same period, your monthly payments would be about £250 but you’d then have a final payment of about £8,000.

PCP = Your monthly payments will be much lower, and/or your initial deposit will be much lower, and/or your repayment term will be shorter, but your left with a much larger final payment agreement set i.e the balloon.
If you are unable to pay off this final lump sum, then possibly you'll be forced to purchase another new vehicle, to write off the previous money owed.
It depends what you signed up for, it's your responsibility to check the finance agreement i.e contract.

Basically you're just renting that car for 4 or 5 years, unless you can afford to pay off the final payment, if you can then that means you'll own the car.
But if you can't then you possibly can give the car back, but only if cars value is equal to what you owe, if not then you still owe money.

MAKE SURE YOU READ AND UNDERSTAND THE FINANCE CONTACT, as there are different types, if in any doubt ask them questions or don't sign the contract, and walk away and find a more affordable deal.

Basically it all comes down to what you can afford, but HP or PCP both these have set rules you must abide by in regards to agreement in your contract:

1) Mileage must not go over set limit over agreed term.

2) The car must not require any repairs beyond normal wear and tear, which is why if you're not purchasing a new car, the finance company may insist you get extra warranty cover. READ YOUR CONTRACT or ask them this question.

3) You must have the car serviced in accordance with your contract, which possibly can say Main Dealership only.

If you break any of the above set rules you'll be given a penalty charge.

As regards to getting your car serviced at the proper Main Dealership, the finance company will normally insist that you do, as the cars value will be worth more at the end of your term, or you might be given a penalty charge, for not using a Main Dealership.
if you don't agree with anything ask the question, but please don't just sign the contract with out fully understanding it.

Hope this helps

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