At the end of a PCP agreement, you can hand the car back instead of paying the final payment. It’s often the right choice if the car is worth less than the final payment, but it’s important to know what the lender will check, because damage and extra mileage can lead to charges.
In short
Yes, you can hand back a PCP car at the end of the agreement and owe nothing more, as long as it’s within your agreed mileage and in good condition for its age. If you’ve gone over your mileage or there’s damage beyond fair wear and tear, the lender can charge you.
Can you hand back a PCP car?
Yes. Handing the car back is one of the three options at the end of a PCP, along with paying the final payment or part-exchanging. Because the final payment is guaranteed by the lender, you can hand the car back even if it’s worth less than the final payment.
To hand back a car before the end, see voluntary termination.
What condition does the car need to be in?
Most lenders use the BVRLA fair wear and tear standard, or their own similar guide. In general:
- Usually acceptable: light scratches and stone chips that haven’t broken the paint, minor scuffs on wheels, normal interior wear.
- Usually charged: dents, cracked glass, deep scratches through to the metal, kerbed or damaged wheels, tyres below the legal limit, interior burns or stains, and missing keys or service history.
Your agreement or your lender’s website will have its own guide. It’s worth reading a few months before the end.
Excess mileage charges
At the start of a PCP, you agree an annual mileage. If you go over the total, you pay a charge for each extra mile. The rate is in your agreement, often somewhere between 5p and 15p a mile.
Worked example
You agreed 10,000 miles a year over a three-year PCP, so 30,000 miles in total. You hand the car back with 34,500 miles.
- Excess miles: 4,500
- Charge at 8p a mile: £360
If you’re heading for a large excess, it can be cheaper to ask your lender to increase your mileage allowance during the agreement, or to compare this with paying the final payment or part-exchanging.
What happens on hand-back day?
- Contact your lender a few months before the end to confirm you want to hand the car back.
- Collection or drop-off is arranged, often by an inspection company.
- Inspection. The inspector records the mileage, photographs any damage and lists anything missing.
- Paperwork. Hand over all keys, the V5C if you have it, the service history and any accessories that came with the car.
- Final invoice. If there are charges, you’ll receive an itemised invoice with photos.
Take your own dated photos and a video of the car, inside and out, on the day.
Disputing charges
If you think a charge is unfair, ask the lender for the inspection report and photos, and compare them with the fair wear and tear guide. Then complain in writing.
The lender has up to 8 weeks to give a final response. If you’re not happy with it, you can take your complaint to the Financial Ombudsman Service, which is free.
How to avoid extra charges
- Read the wear and tear guide a few months before the end.
- Fix minor damage first, as a smart repair is often cheaper than the lender’s charge.
- Keep up the servicing, and keep the records.
- Track your mileage during the agreement and adjust your allowance if needed.
- Clean the car inside and out, and find all keys and accessories.
Hand-back FAQs
Can I hand back a PCP car early?
Yes, if you’ve paid half the total amount payable, through voluntary termination. Otherwise, you can settle the finance early or part-exchange.
What if I’ve gone over my mileage?
You’ll pay the excess mileage charge in your agreement. If the car is worth more than the final payment, part-exchanging or buying and selling it may work out cheaper, so compare your options.
Do I need to get the car serviced before handing it back?
It should be serviced in line with the manufacturer’s schedule. Missing services can lead to charges, as they affect the car’s value.
Can I hand back a car if it’s worth more than the final payment?
You can, but you’d be giving away that extra value (equity). Part-exchanging or paying the final payment and selling the car usually makes more sense.
What happens if the car has been in an accident?
Damage beyond fair wear and tear will be charged, even if it was repaired badly. Get repairs done properly through your insurer before handing it back.