What happens at the end of a PCP agreement?

One scheduled end-of-term option is usually to return the vehicle under the agreement rather than pay the optional final payment.

The finance provider or its appointed agent may arrange collection, an inspection, delivery to a named location or another return process.

Before returning the vehicle, confirm:

A PCP agreement normally includes an agreed mileage allowance.

If the vehicle has exceeded that allowance when it is returned, the finance provider may charge the excess-mileage rate stated in the agreement.

Check:

A returned vehicle may be inspected against the finance provider’s condition requirements.

Normal wear from careful use may be accepted, while damage outside the permitted standard may result in a charge. The distinction depends on the provider’s rules, the agreement and the condition of the vehicle.

Possible inspection areas may include:

Inspect the vehicle before the return date and compare its condition with the provider’s standard.

Where damage falls outside the permitted standard, you may consider obtaining a quotation from a reputable repairer before return.

Before authorising work, consider:

The optional final payment, sometimes called the balloon payment, is the amount stated in the agreement that is normally payable if you decide to buy the vehicle at the scheduled end.

It is based on the finance provider’s estimate of the vehicle’s future value when the agreement was created. This estimate is often described as the Guaranteed Minimum Future Value or GMFV.

Paying the optional final payment may not be the only required step. Check whether the agreement also requires:

Not necessarily.

The optional final payment was set when the agreement began using an estimated future value. The vehicle’s actual market or trade value at the end may be higher, lower or broadly similar.

Contact the finance provider before the payment is due and ask what options it makes available.

A provider or another lender may discuss a new credit agreement or another way of funding the payment. Any new borrowing is separate and may involve interest, fees, affordability checks and credit assessment.

Refinancing does not automatically make keeping the vehicle the cheapest option. Compare the total amount repayable, the term, interest and fees before entering another agreement.

Drive On does not provide financial advice, refinance optional final payments, broker finance or submit finance applications.

If the payment is unaffordable, contact the finance provider as early as possible and consider free, impartial guidance from MoneyHelper.

A dealer may discuss another vehicle transaction before or at the scheduled end of the PCP.

The dealer may appraise the existing vehicle and compare its value with the amount needed to deal with the existing agreement.

Depending on the figures and transaction:

The agreement already states the optional final payment, but a dealer or finance provider may still use current settlement information when arranging a vehicle transaction or confirming the amount required to close the agreement.

Ask the finance provider what document or figure is required for the specific option you are considering.

A settlement quotation may have an expiry date and should not be treated as valid indefinitely.

Drive On cannot calculate or verify the amount required.

Potentially.

Changing the vehicle before the scheduled end normally requires the outstanding finance position to be assessed using a current settlement figure and vehicle appraisal.

The outcome depends on the agreement, vehicle value, condition, mileage, finance provider, dealer and proposed transaction.

Read more about changing your car before your PCP ends

No.

Returning the vehicle under the scheduled end-of-agreement option happens when the agreed PCP term reaches its normal end.

Voluntary termination is a separate legal process that may allow a consumer to end certain regulated finance agreements early after the required proportion of the total amount payable has been paid, or after enough is paid to reach that amount.

The total amount payable under a PCP includes the optional final payment, so the relevant point may be reached relatively late in the agreement.

Consumers considering voluntary termination should review their agreement and seek information from the finance provider or an independent organisation such as MoneyHelper.

Do not cancel a Direct Debit or stop following the finance provider’s payment instructions merely because the final ordinary monthly payment has been made.

The optional final payment, fees, arrears, return charges or other amounts may still need to be dealt with.

Wait until the finance provider confirms:

Retain the provider’s written confirmation where available.

This is general guidance only. The consumer must follow the provider’s specific instructions.

Drive On allows consumers with an existing PCP agreement to share their current vehicle and PCP position once.

Approved dealers can review a masked summary of the opportunity. Direct contact details are not shown unless a dealer chooses to unlock the opportunity.

Submitting details is free for consumers. There is no consumer account and no obligation to proceed.

Drive On does not decide which end-of-term option is suitable, inspect or collect vehicles, value vehicles, calculate charges, calculate or verify settlement figures, settle finance, arrange returns, provide financial advice or broker finance.