If you’re paying for your car on a PCP (personal contract purchase), are you allowed to modify it in any way?
That’s because during a PCP agreement, you don’t own the car outright. You’re the registered keeper and responsible for looking after it, insuring it and making the payments, but you do not legally own it in clear title until you make the optional final payment (known as the balloon payment).
Why PCP contracts restrict modifications
A PCP agreement is built around one key assumption: the car will be worth a certain amount at the end of the contract. That predicted value is used to calculate your monthly payments.
If you choose not to pay the final lump sum, the finance company takes the car back and sells it. For that to work, it needs to be confident that the car can be sold easily and at the expected value.
Modifications can interfere with that. Some reduce resale appeal. Some make the car harder to sell. Others may void the new car warranty, which also affects value.
Even if you fully intend to buy the car at the end, the lender cannot rely on that. People’s circumstances change. If you lost your job or needed to reduce your outgoings, you might hand the car back instead. From the lender’s perspective, it has to be prepared for that possibility at any time.
That is why most PCP contracts prohibit permanent or value-altering modifications.
What happens if you ignore the agreement?
If you modify the car without permission, you may be in breach of contract. That’s likely to have repercussions.
In serious cases, the finance company can demand early repayment of the outstanding balance. That might sound unlikely, but it has happened in recent years to a prominent YouTuber who modified his BMW M4 without permission and the finance company cancelled his agreement (probably after watching his YouTube videos…).
For most people, settling thousands of pounds at short notice simply isn’t realistic. If payment is not made, the lender can repossess the vehicle and sell it. If the sale price does not cover what you owe, you remain responsible for the shortfall.
More commonly, the issue arises at the end of the agreement. If you hand the car back with unauthorised modifications, the finance company can charge you to return it to standard condition or bill you for any loss in value. Either way, it can become expensive.
There is also an insurance risk that is often overlooked. Any modification, however small, must be declared to your insurer. If you fail to declare it and the car is written off, your insurer could refuse to pay out. You would still owe the finance company the remaining balance on the agreement.
Are any changes allowed?
Small, easily reversible additions are usually considered acceptable, although you should still check your specific agreement. If you’re not sure, speak to your finance company.
Fitting removable accessories is fine. Items such as removable seat covers, floor mats or suction-mounted sun shades are not a problem because they can simply be taken out before the car is returned. Removable roof racks or roof boxes are also generally fine, provided they are not permanently fitted and are removed at the end of the contract.
Towbars sit in a grey area. Some finance companies will allow them, but often only if they are manufacturer-approved and fitted by the supplying dealer. Others may insist that the vehicle is returned to its original condition before it is handed back. If you are considering a towbar, you need written confirmation from the finance provider before going ahead.
Performance upgrades, engine remaps, suspension changes, body kits and non-standard wheels are far more likely to be refused. These can affect reliability, warranty cover and resale value. Even cosmetic changes may be treated as modifications under strict agreements.
Replacing tyres is not normally an issue, as these are consumable items. However, if you’re changing the type of tyre in any way, like fitting tyres designed for racetrack driving, the finance company (and the insurance company) may consider that a performance modification.
Do not assume something is minor simply because it looks minor.
What if I plan to keep the car?
You might be certain that you will pay the optional final payment and keep the car. But until that payment is made, you do not own it.
If you modify the car and later decide not to, or cannot, make the final payment, you may have to pay to remove those modifications before returning the car. Any money you spent on them is effectively lost.
If modifying your car is important to you, PCP is usually not the most suitable way to finance it. Paying cash or using a personal loan means you own the vehicle outright from day one and can modify it as you wish, subject to insurance and warranty implications.
What should you do before making any changes?
If you are thinking about modifying a PCP car, take these steps:
- Read your finance agreement carefully, paying attention to clauses about alterations or value.
- Contact the finance company directly, rather than relying solely on what a dealer tells you.
- Get written confirmation if permission is granted.
- Inform your insurer of any approved modification before it is fitted.
Assume that modifications are not allowed unless you have clear written approval. A dealer might be able to explain some terms of a finance agreement, but it’s always a good idea to speak with the finance provider directly to discuss any questions you may have before signing the contract.
The bottom line
With a PCP agreement, it’s best to treat the car as if you are borrowing it. A PCP is a bit like a mortgage on a house in that it’s a secured loan, so you don’t own the car outright until the last penny of the loan is paid off.
If you’re buying a car with the intention of modifying it, you’re better off considering other financing options, like a personal loan (or cash, if you have it available). That way, you own the car outright and can modify it however you like.
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