Ballooning loans: 'Seat switched our car finance deal at the last minute'

The payment at the end of a car finance deal is known as the balloon payment - Verónica Grech for The Telegraph

My husband and I ordered a new Seat in August 2018 to be financed via the firm’s 3.5pc APR deal with a total cost of £19,161 – assuming we exercised the option to buy the car at the end of the term.

The estimated delivery date was in November and the offer period for the finance deal ran to the end of the year. In any case, we were told, once the deal was entered into it would be honoured. I was approved for the finance and we paid our deposit.

In November we chased a delivery date and were told it was delayed, probably until March. There was no mention of the finance deal being jeopardised.

The car was ready in January, but we requested March delivery for a 2019 plate. At the end of February, Seat Finance sent the paperwork and we discovered that a completely different finance deal was being offered. The new deal is £1,000 more expensive should we wish to buy the car at the end – which is our intention.

Seat Finance refuses to budge on honouring the original terms before we encountered the delay, claiming its hands are tied.

HP, Surrey

The finance you applied for is a hire purchase agreement where you pay monthly instalments on a car with the option to buy it by the end of the contract – or return it. The payment at the end is known as the balloon payment.

The current deal on the table is at a much higher interest rate of 6.6pc. The monthly repayments are the same, but the balloon payment works out at almost £1,000 more.

I contacted Seat Finance, the provider of the credit, on your behalf and it agreed to review the case along with the manufacturer, Seat UK. Between them they happily came to the conclusion that you shouldn’t lose out as a result of the manufacturing delays after all.

Instead of applying the old terms, Seat UK decided to send you a cheque for £1,000 to cover the difference the new finance terms would make to the balloon payment. You are both delighted and have now signed the deal and taken delivery of your car.

Seat Finance remained rather tight-lipped about the outcome, but a spokesman for Seat UK said: “Unfortunately there was an unavoidable production delay with this customer’s order but we were happy to find a resolution to their concerns.”