End of car finance – what are my options?
If your car finance agreement is coming to an end, it’s a good idea to think about your next steps
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When you’re coming to the end of a car finance agreement, you might be wondering what happens next.
The choice is really yours. There are a few things you can consider as your next step after Personal Contract Purchase (PCP) or Hire Purchase (HP) car finance, or even after a personal car loan.
This can include things like part exchanging, returning your car, or keeping it.
Our guide explains your end of car finance options so you can find the right option for you.
This guide will cover:
Types of car finance
What are my options when my car finance ends?
Frequently asked questions
Next options after car finance
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Types of car finance
You might’ve been surprised to find out there are a few car finance options to consider, or you could be weighing up something new for your next deal.
PCP and HP are the most common types of car finance – but how do they work?
Personal Contract Purchase (PCP) car finance
PCP lets you pay a deposit and then make monthly payments across an agreed term (usually 36 to 60 months), with an optional pre-agreed ‘balloon payment’ (also known as ‘final optional payment’) at the end of your contract.
The monthly payments cover the depreciation of the car, and the balloon payment is your chance to buy the car outright.
If you don’t want to keep the car, you can hand it back to the lender and skip the balloon payment. Just be aware that you might have to pay fees for damages.
Read our full PCP car finance guide to get all of the details.
Hire Purchase (HP) car finance
You also pay a deposit and make monthly payments with HP car finance, but this time there's no final balloon payment.
The monthly bill is typically higher than PCP because you own the car at the end of your HP agreement.
There’s a small ‘option to purchase’ payment at the end of your HP car finance included in your final monthly payment. Check your agreement to find this.
Get all the details in our HP car finance guide.
Other types of car finance
Taking out a personal loan to pay for your car is another way of financing. The money owed isn’t secured against the car like with PCP or HP, so you’re free to sell it before the loan is paid.
There’s also Personal Contract Hire (PCH), where you essentially ‘rent’ a car long-term.
PCH is similar to PCP, but there’s no pre-agreed balloon payment option, and you’ll have to ask your PCH lender if you can buy the car – but there’s no guarantee.
We don’t offer PCH or personal loans here at cinch, but you can use a personal loan to buy one of our cars.
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What are my options when my car finance ends?
When your car finance agreement is coming to an end, there are a few options you can consider as your next steps.
End of PCP car finance
Part exchange – swapping your car
You can choose to part exchange your PCP car – sometimes even before your car finance agreement ends.
Your lender can give you a settlement amount to pay your car finance off early, and the retailer you're exchanging your car with might be able to help by settling the finance for you.
Here at cinch, we can settle your outstanding finance early so you can part exchange for your next vehicle without the faff.
Hand the car back
Your PCP car finance agreement will give you time to get to know your car. Think of it as a long-term test run, as you can choose to hand your car back at the end of your contract.
Just keep in mind that you might have to pay extra fees if you damage your car or go over your mileage allowance and want to return it.
Some normal wear and tear, such as very minor scratches, is allowed, but anything more than this could cost you.
Keep the car
You can also choose to simply pay the balloon payment to take ownership of your car.
Some people take out a personal loan to pay their balloon payment, so they own the car (because the loan isn’t secured against it) but continue monthly payments.
End of HP car finance
Change cars – part exchange or sell
At this point, you can choose whether you want to stick or switch, as you’ll be able to sell the car or part exchange.
Like PCP, you can also switch your car before the end of your contract by paying the settlement fee.
Your lender can offer you a settlement amount to pay off your car finance early, and the retailer you're exchanging your car with might be able to settle the finance for you.
At cinch, we can settle your outstanding finance early so you can part exchange for your next car.
Keep your car
Once you’ve made your final HP car finance payment and the option to purchase payment – the car is yours!
There aren’t any extra fees for damages or mileage because you’re not handing the car back.
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Frequently asked finance questions
Will I own the car at the end of my finance agreement?
That depends on the agreement. You’ll own your HP finance car after that last payment is made, but you’ll need to make the balloon payment on a PCP agreement to take ownership.
With PCH (car leasing), you won’t own the car when the agreement ends, and you’ll need to hand it back. Speak to your lender if you want to keep the car – they might let you buy it, but there’s no guarantee.
Can I return a car that I can’t afford the finance on?
You can return a finance car if you can’t afford the payments on your PCP or HP agreement. You should always speak to your lender about your individual circumstances and see if they can help.
Most lenders have their own policy on how to help customers in difficulty, which may include one of the following options.
If you’ve paid half or more of the total amount payable, you can choose to terminate your contract and hand the car back. This is known as voluntary termination.
Voluntary surrender means you hand the car back, but be aware that you are usually still liable for the outstanding finance. This is usually a last resort for those struggling to make payments.
Are there any charges at the end of a finance agreement?
There are charges at the end of most car finance agreements that will always be detailed in the Credit Agreement.
With PCP, you have that balloon payment if you choose to pay it, and with HP, you have the ‘option to purchase’ fee added to your final payment.
There may also be extra charges for things like exceeding your mileage or damages outside of wear and tear.
Car finance next steps
It’s up to you to decide the best route for you, and we have plenty of car finance guides if you want to learn more about your options.
You can also get a free part exchange quote on our site, and we’re able to settle PCP and HP car finance if you want to switch it up before your contract ends.