What happens at the end of a PCP agreement?

You choose: pay the final payment and own the car, hand it back, or use any equity towards a new agreement. Handing it back can bring excess mileage or damage charges if your agreement provides for them.

Last reviewed 6 October 2026. The official sources it draws on, and the date each was read, are listed at the foot of the page.

Pay the final payment and keep the car

The Financial Ombudsman Service says that at the end of a hire purchase or PCP agreement you can make the final payment, also called the balloon payment, and become the legal owner of the car. The FCA describes the same route as owning the car by paying the deferred value.

Hand the car back

If you do not want to take ownership, the Financial Ombudsman Service says you do not pay the final payment and can return the car. The FCA notes that giving the car back will often bring excess mileage or damage costs.

Whether a charge applies, and how much, depends on what your agreement says about the mileage allowance and the condition of the car. The Financial Ombudsman Service looks at each damage charge to see whether it is fair and reasonable, taking account of the age and mileage of the car when it was first hired and returned.

Use equity towards a new agreement

The FCA describes a PCP customer entering a new agreement using any equity built up over the existing one, and notes that customers may be approached about this before the agreement ends. Equity here means the car is worth more at the end than the deferred value you would pay to own it; if it is worth less, there is none to use.

If you are unhappy with an end-of-agreement charge

Complain to the lender first. If it has not sent a final response within eight weeks, or you are unhappy with it, you can take the complaint to the Financial Ombudsman Service, which is free to use. You have six months from the date on the lender’s final response to do so, and the Ombudsman usually cannot help after that. Excess mileage and damage charges are a type of complaint it sees, and it weighs the circumstances of each.

Before the end

You are not tied to waiting for the end date. A regulated agreement can be settled early or, for hire purchase and PCP, ended by handing the car back under the Consumer Credit Act; each has its own answer. The Act extends across the UK, including Northern Ireland.

Sources

FCA: Our work on motor financeRead on 6 October 2026. The choices at the end of a PCP, using equity towards a new agreement, and excess mileage or damage costs on giving the car back.
Financial Ombudsman Service: Car financeRead on 6 October 2026. The final payment makes you the legal owner; returning the car without paying it; end-of-agreement charges; how to complain, including the eight-week final response.
Financial Ombudsman Service: Time limitsRead on 6 October 2026. Six months from the date on the final response to bring a complaint to the Ombudsman, which usually cannot help after that; the exceptions it lists.
Consumer Credit Act 1974, section 94 (right to complete payments ahead of time)Read on 6 October 2026. The right to settle a regulated agreement at any time by notice and payment.
Consumer Credit Act 1974, section 99 (right to terminate hire-purchase agreements)Read on 6 October 2026. The right to end a regulated hire-purchase agreement before the final payment falls due.

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