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Car finance agreements are usually spread over 3-5 years and if you’ve got a car on finance, you may be coming to the end of your car finance agreement and are confused as to what the next steps are. For many people, you will simply hand the car back to the dealer and the agreement has ended. However, what are your options if you want to keep the car at the end of your car finance deal? Our latest blog looks to explore the options you have at the end of your car finance agreement. Depending on the type of car finance you have chosen, you will have different options available to you. Let’s explore each in more detail and help you decide what to do at the end of a car loan.

What to do at the end of your car finance agreement?

In the UK, there are 3 main types of car finance which tend to be the most popular. We specialise in HP cars for people with bad credit but can also offer PCP car finance and personal loans. Let’s take a look at your options at the end of each car finance agreement.

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Personal Contract Purchase

If you’re wondering what to do at the end of a PCP agreement, you have more options than other car finance deals. PCP deals are a flexible and affordable way to spread the cost of getting a car. One of the main benefits is the low monthly payments on new or used car finance due to the structure of the agreement. Instead of covering the cost of your chosen vehicle, you instead pay the cost of the depreciation. This means at the end of your PCP deal; you have more options.

  1. Hand the car back to the dealer. If you’ve had your car for a number of years and made all the repayments on time, at the end of your PCP car finance deal, you can simply hand the car back to the dealer and the agreement has ended.
  2. Pay the large balloon payment. PCP have low monthly payments, but this means at the end of your deal, there will be a large balloon payment to pay if you want to keep the car you love driving. The final payment can be thousands of pounds to pay, and many people may not be in the right financial situation to fund it. Find out more about refinancing a PCP balloon payment.
  3. Part exchange it for a new car. If you come to the end of your PCP agreement and want to get a newer car, you can use the value of your current PCP car towards your next PCP deal on a newer car. It’s easy to part exchange a car on finance and can be one of the most popular ways to trade in your current car.

Find out more about financing a car through PCP.

Hire Purchase

Hire purchase car finance is a straightforward way to spread the cost of your chosen vehicle into affordable monthly repayments. HP deals can be spread over 1-5 years and if you’re at the end of your hire purchase deal, there are two easy options to consider.

  1. Pay the final payment and keep the car. Unlike PCP, there is no large payment to pay. There is an ‘option to purchase’ fee if you want to keep the car but this is usually similar to the monthly payments you have been making already so can be really affordable. Once this payment has been made, you will then be the legal owner of the car on finance.
  2. Hand the car back to the dealer. If you’ve enjoyed the car you’ve been driving but if you want to change your car on finance, you can hand the car back to the dealer as long as all repayments have been made and the car is in good condition.

Personal Loan

A personal loan is one of the most cost-effective ways to get a car. A personal loan is usually offered by banks or building societies. They provide you with the money to buy a car outright as it gets deposited into your bank account. However, it can be hard to obtain car finance if you have bad credit. When you come to the end of a personal loan, there’s actually nothing that you need to do. You will automatically be the legal owner of the car at the start of the deal and as long as you’ve kept up to date with your repayments, there’s nothing else to do. You can sell the car or modify it as you like throughout the agreement. 

Not affect to your credit score!

Will my credit score be affected?

When you get to the end of your car finance agreement, your credit score should not be affected. If you have kept up to date with all of your payments, made them on time and in full and also handled any other financial commitments correctly, your credit score could have improved in this period. Your credit score will only drop if you have failed to stick to the terms of your credit agreement. 

Ending a car finance agreement early

If you’ve not yet come to the end of your car finance agreement or if your car on finance has been written off, there are a number of options to end your car finance agreement early. Through voluntary termination, you are able to cancel your car finance early if you have made at least 50% of the repayments. If not, you may need to make up the difference before you can cancel early.

Find out more about your options to end a car finance agreement early.

ending car finance contract

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