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

The popularity of PCP car finance has allowed car manufacturers to be rather sneaky when it comes to forcing you to have your car maintained by their dealer service network, something that many car buyers are unaware of.

Today’s article comes after we received a question from Paul via 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 , but there is another issue to consider if your car is financed using a PCP.

New car warranty and servicing – PCP car finance

 

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.

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.

This article was originally published in August 2015, and most recently updated in May 2018.

Stuart Masson
Stuart Massonhttp://executivecondominium.info/
Stuart is the Editorial Director of our suite of sites: The Executivecondominium, and . Originally from Australia, Stuart has had a passion for cars and the automotive 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.

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65 COMMENTS

  1. Question
    I understand the annual service must be carried out by the dealer, however for minor repairs such as a scratch or a puncture, could the car be taken to any repair garage?

    • Hi Lorraine. Yes, that’s absolutely fine. As long as any tyres being replaced are correct specification for your car, it won’t affect you if you hand the car back at the end of your PCP agreement.

  2. Hi Stuart

    For the first time in my life, I’m buying a new car.

    I’m buying a new Toyota CHR directly from Toyota. The car warranty is 5 years and will buy it through a PCP plan, since they are offering 0% APR for the new CHR. I always thought I would use their services to keep everything smooth. My question to you would be: Could I expect to have free car service in a new car in this situation? Thank you so much!

  3. Ohh so glad I saw this article. I think I’m right in thinking this?!?

    The GFV on my Audi dropped even before I collected the car new, they gave me the option to switch over to the new deal which was a lower GFV, a slightly lower APR, but a higher monthly payment due to the lower GFV! I stayed on the original deal with a higher GFV as I was happy with the monthly cost. With that in mind I’m almost certainly going to be giving the car back at the end, as the value of the car will be less than the GFV I have been given, even with a full Audi service history!

    So by going to an Audi specialist (which is what I was about to do) I would just be giving them ammunition to hit me with the difference between the cars value at the end of the deal with full history vs its value without a full Audi history!?!?

    Thanks.

    • Hi Lee. You’ll have to check your finance contract, but it’s normal practice for the finance company (I assume Audi Finance, a.k.a. Volkswagen Financial Services) to insist that the car must be serviced at the dealership or you’ll be hit with a penalty charge when you give the car back.

  4. Hi. My son purchased a BMW with a PCP agreement. The salesman advised there would be x2 free services. Car is now due a service. Upon checking the paperwork there is no mention of free servicing. Is there anything we can do to avoid the hefty service charges. I appreciate my son was naive not to check paperwork initially.

    • Hi Donna. The old “free services” offer happens a lot; he will need to go back to the dealer and get some confirmation of the free servicing, but they could deny any knowledge of it. If you don’t have it in writing, it doesn’t exist…

  5. Hi,

    So my car is PCP and due its first service in July. It is a vauxhall, does this mean I will have to have it done by a Vauxhall dealership?

    Can I take it somewhere like Halfords or Kwik-Fit?

    Thanks

    • Hi Craig. You will need to check your finance contract, but generally the finance company will insist that the car is serviced by a Vauxhall dealer. That’s the whole point of the article.

  6. I have just bought a car on PCP which has covered 27k miles and requires a next service in 7k miles. Upon phoning BMW they have no service record for the vehicle and the garage which i bought the car from says they carried out a service at 25k. Do i need to carry on at BMW as they have sold me a car that hasnt been in the 1st place?? Thanks for any help in advance.

    • Hi Andrew. From your comments, I am guessing that you didn’t buy the car from a BMW dealer and therefore it’s probably not financed through BMW Finance. You will need to read your finance contract and/or speak to the finance company and ask them about it.

      In theory, the selling price of the car should have reflected the fact that it hadn’t been serviced by BMW. However, if the GFV has been calculated based on you servicing the car with BMW while you own it, they may still insist on it.

  7. Hello I am 3 years in to my 4 year PCP on my Audi A1. My very first MOT is due on 13/05/18 Does my MOT need to be done at the Audi garage? I had my first service done at Audi in December 2017. (Next May) I think I will more than likely hand the car back as I’m saving to buy my first house and I think having a car on PCP goes against me when I will apply for the mortgage?

    • Hi Wayne. No, you do not have to have an MOT inspection done at an Audi dealer.

      Having a PCP won’t necessarily work against you in a mortgage application. A mortgage company will want to be confident that you can afford your monthly mortgage repayments, so it would depend on how much you are paying for your PCP and various other expenses each month.

      If you are stretching your salary too far to cover all your monthly bills, it will work against you. If you are likely to still be in a comfortable position each month, it won’t be a problem. To work out whether that’s likely or unlikely, you would need to speak to a financial advisor so you can go through your specific financial position and get a better idea of what you can comfortably afford. They would be able to advise whether you should reduce your monthly spending to assist with any mortgage application.

  8. I have just spoken to BMW Financial Services and they have advised me that I can take my car to an independent as long as they use genuine BMW parts. My car is on a 4 year PCP.

  9. Hi, I have been told I need to get new wipers, brake fluid, and the air con service is due on my Audi A3 which is on a PCP deal. I had the car already serviced with Audi but can I go to an independent garage to get all the jobs done above and not lose out on the GFV? The cost of wipers alone from Audi was nearly £80.
    Cheers.

    • Hi Sam. The wipers certainly shouldn’t be a problem. As for the brakes and air-conditioning, you will need to check your service manual to see what is specified. If those points are covered in the car’s service schedule then the finance company would presumably expect you to have them done by an official Audi service centre.

      If you do go to an independent garage, make sure that you insist that they use correct Audi-specified parts at all times.

  10. Hi
    I’ve had my car serviced by a registered garage who use genuine Mercedes parts. I spoke to my finance company and they have said it is fine for me to take it as well as breakdown cover and warranty nothing will change. It is only when you take it back and they find that no genuine parts are used then you will get fees applied so you must make sure to get reciepts. My service has been done with 1 year warranty on the parts used. So when my car goes for my next year service at mercedes and if any parts are not genuine i still can go back to the registered garage i chose.
    As i have purchased the service pack with mercedes for my next 2 services which is a good deal.
    Hope this helpes.

    • Hi Sazz. It may depend on the finance company. If it’s Mercedes-Benz Finance, it definitely wasn’t the case a few years ago but may have changed by now. If your finance agreement is with a different finance company then it may be different.

    • Correct. Obviously, you want to be confident that you are definitely going to buy the car and will have the finances in place to do so. If things change and you decide at a later date that you do want to give the car back, you will be stung with additional charges.

  11. I am now concerned that my service is overdue by a month now so will they penalise me for that bearing in mind this is my first service and now I will have to wait for another 2 weeks before my local Mercedes dealer can fit me in for a service. Should i avoid driving the vehicle in this time?

    • Hi Sazz. I’d try to see if you can get a service quicker at another Mercedes dealer. The details of your contractual servicing requirements should be written in your finance agreement, or you can call the finance company and check it with them.

  12. Very good advise here i was just about to have my car serviced by a independant garage as i was told it would not affect my warranty as long as they use manufacture approved parts, but after reading this
    I have realised it will affect my pcp finance agreement. The garage i bought my car from have very bad customer service and i have had problems with them already regarding the star guard products they applied on the vehicle without my consent. So this would have been another argument to go through with them.
    Thank you for your clear guidance on here.

  13. before your last payment on pcp can the dealership buy your car if its decided its worth more than the gfv and sell it on for you after paying off the last payment?

    • Yes, if the dealer is buying the car from you as a part-exchange, they will settle the finance. If the car is worth more than the GFV, you can use the extra (called equity) to put towards your next car.

  14. when you hand back your keys under pcp can you get more than the gvf. my dealerships thinks its posible because
    of very low milage and condition?

    • No, the dealership is either lying or stupid. When you give the car back to the finance company, you are doing so in lieu of paying the balloon that you owe.

      If it’s worth less than the GFV, the finance company loses out. If it’s worth more than the GFV, the finance company wins.

  15. I have a car on PCP and I don’t tend on keeping the car. It’s due it’s 1 year year service and the end of the month/beginning of next month. I normally take out the service plan to spread the cost but the finance company didn’t set up the paperwork that I signed at the dealership. So my question is my uncle is a mechanic and has his own garage if he was to do the service would this be an issue with the Manufactor?

    • If you plan to give the car back to the finance company at the end of the agreement then yes, it will be an issue with the finance company. It’s exactly as we explained in the article above.

  16. Brilliant Site with so much useful information. Was not really sure where to post this but hoping you can help? Currently have a VW Polo (14 plate) which is financed with Black Horse have around 5 months left on a 4 year PCP so am at the stage of looking at trading in. Have around £900 equity towards a new car. Have my eye on a MINI Cooper and have been offered deals at around 8% APR on a 4 year PCP on a 15/16 plate. Can you advise if there is any benefit to PCP on a used car over a new? Everything is saying PCP a new although given I may wish to apply for a mortgage in a few years time the thought of having 15k financed on a car is scary! Given this will be noted on my credit file.

    I should say… I have a budget of around £180 a month. Not bothered about ownership and so HP and a loan seem the wrong way to go as well. I am looking around 12-13k on a used mini but is it pointless signing a new PCP for a car that may be only a year older than my current VW Polo.

    • Hi Carly. The main difference between a PCP on a new car and a PCP on a used car is that the deals are usually much better on a new car. You will almost always find lower APRs on new car finance dealers, and there are often deposit contributions available as well.

      The flipside of that is that, obviously, a new car is more expensive than a similar model that’s a couple of years old. Even with a better finance deal, a new car will almost always remain more expensive than a used car.

  17. Hi, I have an Audi A1 on PCP. It’s a ‘15 plate and under its 3-year warranty. A couple of days ago I lost power going up to 5th/6th gear on a motorway and the revs also dropped. I slowed down and managed to get home. I called Audi Assist yesterday and all my car’s PC checks came back fine. The guy took it for a drive and the same thing happened to him which he identified as a clutch problem. I called Bradford Audi to see if I could bring my car in for repairs but they said I would need to authorise works to remove the gearbox to access and test the clutch at £165/hour x 5 hours. As my car is 2.5 years old with 22000 miles there is a possibility it’s a fault which means this fee
    would be waived as my car is still under warranty. However, if I need works doing that’s deemed my fault then I would need to pay this fee a new clutch etc. This seems excessive and it might not even be the clutch that’s the problem! Do I have to go to Audi or can I go to a local garage? I don’t want to discount any agreement I might have with my PCP agreement. I’m not sure how to proceed!

    • Your warranty rights are separate to your PCP requirements, so you don’t need to worry about that.

      If you want the clutch fixed under warranty, it has to be done by an Audi dealer. However, the dealer is correct to point out that if the problem is not a car fault (and clutches are wear-and-tear items, so it may not actually be faulty), then you will have to foot the bill.

      If you take to an independent garage and they advise that it is a warranty problem, you will still have to pay them for their time and then take it to Audi anyway.

      I suggest having a look on various Audi owners’ forums to see if any other A1 owners are reporting the same issues, as you may be able to learn from their experiences.

  18. Hi, I have a Jeep Cherokee and got quoted £622 for a 2 year service. We are on a 3 year PCP service. I told my local garage who are really good. Their faces were a picture to say the least. Ask other Jeep garages and some went £522. I am wondering what they are doing for that cost. Their answer was to purchase for £999 3 Services..still excessive. Whilst PCP is flexible to buy a new car it certainly has pitfalls. Our plan is to pay the remaining balance, buy the car and then sell it privately thus maximising the retail value rather losing money on a trade. We should have £4k in the car buy then. I am sure the monopolies commission under what is called a Block Exemption Reg (BER) stops financial penalties for going to another garage. Good Garage Scheme explains this. Remember with PCP you will never get you deposit back, its used to reduce the monthly payments to suit your lifestyle. Therefore are the end of the plan you get a new car but with more deposit, walk away or buy. Personally I would buy, and sell privately if you can afford the loan..then go shopping again.

  19. Hi,
    I have a car on PCP from Audi. I have some minor damage to the one side of my front bumper. Will I have to take it to the dealer to fix it or can I take it to an audi approved garage? I have not yet informed the dealer of the damage… Will i need to if i take it to an audi approved garage and get it fixed?

    • Hi Danny. Check the wording of your PCP contract, but usually the finance company cannot tell you where to have any minor repairs done. All they can argue is whether the repairs have been done to an acceptable level as you would get an Audi-approved garage. You don’t need to notify the dealer of anything, as your relationship is only with the finance company. Once you drive away from the dealership after purchasing the vehicle, the dealer no longer has anything to do with your finance agreement – all they do is set it up on behalf of the finance company.

  20. 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

    • 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.

  21. 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.

    • 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.

  22. 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?

    • 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.

  23. 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!

    • 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.

  24. 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?

    • 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.

  25. 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.

    • 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.

  26. 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 ed 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.

    • 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…

  27. 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

  28. 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?

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

    • 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.

  29. 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.

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