With the vast majority of private new cars paid for using PCP finance, plenty of car owners want to know about their rights in modifying their cars in any way. We look into this in more detail.
The short answer is no. It’s not your car and, as a result, you don’t have the right to modify the vehicle in any way.
For the duration of a PCP contract the finance company is the owner of the vehicle. This means the terms of your agreement will stipulate what you can and can’t do with the car, this can include mileage restrictions and limits on modifications.
For the majority of finance agreements, the registered keeper (the person who has taken out the finance contract) is not allowed to alter the vehicle in a way that would be irreversible, alter the value of the car or void the warranty.
Any breach of a PCP contract can result in a hefty premature settlement fee or additional costs if the vehicle is handed back at the end of the agreement with unapproved modifications. Once the balloon payment is made, the car then belongs to you and modifications can be made as you wish. Until then, the finance company owns the car.
Why can’t I modify my PCP car?
If you do not own the car outright, the finance company has a responsibility to protect the value of the vehicle. Although the registered keeper may intend to make all payments on time and pay the final settlement fee, circumstances change and this might not always be possible.
This means the finance company has to be confident they can repossess the vehicle at any time in the same condition it was provided in at the start of the agreement.
Modifications can alter the value of the vehicle and the lender may not be able to realise the expected value of the car if it has been modified. Some alterations, such as performance upgrades, may also void the vehicle’s warranty, which can impact the value and saleability of a vehicle.
Regardless of whether a vehicle is on a PCP contract or owned outright, any modifications should always be declared to your insurer.
If the vehicle is involved in an accident and these modifications were not declared, it could mean the registered keeper is liable to pay the outstanding balance to the finance company if the car is written off as the insurance policy would be void.
If you’re hoping to modify your PCP car, check the terms of your agreement before making any changes. Also keep in mind, any money spent on modifications will be lost if you can’t afford to pay the balloon payment at the end of the contract.
What customisations can I make?
We always advise getting permission from the finance company before pursuing any modifications but there are some easily reversible customisations that will not affect a PCP contract. This that things like seat covers or floor mats are fine, as are suction sun shades to keep your kids cool in the back seats, because they can all be removed again – and can often help protect the interior of the car underneath, which helps protect its value.
If you car comes fitted with roof rails, you’re free to fit any kind of removable roof racks, bike carriers, roof boxes, etc. as long as you take them off again before handing the vehicle back at the end of the agreement.
Often, a permanent towbar may be considered an acceptable modifications, although some finance companies will only accept it if it’s an official towbar approved by the manufacturer and fitted by the dealer prior to you taking delivery of the vehicle. If you are unsure of anything, contact your finance provider to discuss the modification you would like to make.
BMW is known for being quite particular about what classes as a modification. Under its contracts, swapping M Sport floor mats for a different set would qualify as a modification (since these particular floor mats are part of the standard specification of the vehicle).
Consumable items such as tyres can be replaced and are not seen as modifications.
What happens if I modify my PCP car?
If a vehicle is modified without permission this could breach the terms of the agreement, and the finance company can request the outstanding balance to be paid in full within 14 days.
This happened to a YouTube presenter named Riccardo Senior, from the channel LivingLifeFast, who documented several modifications to his BMW M4 on his channel. BMW Finance found this to breach his contract and requested payment in full for the outstanding debt. Fortunately, Senior was able to settle the finance and keep the vehicle.
For most people, however, settling the full amount at short notice is unachievable. In this event, the finance company could repossess the car (either immediately or after gaining a court order, depending on the situation) and sell it at auction. If the value reached at auction failed to cover the remaining balance, the person who breached the agreement would be liable to cover the difference.
If a finance company does agree to a modification, this will be on the basis that the vehicle will be returned to its stock condition at the registered keeper’s cost before it is handed back at the end of the term. The registered keeper may incur penalty fees for modifications that have not been reversed or have caused permanent damage to the vehicle.
Always read the contract
If you are purchasing a car with the intent to modify it, a cash purchase or personal loan could be a better route. It is best to work on the assumption that you are not permitted to make modifications to a vehicle until the finance agreement comes to an end and you own the car.
Whilst a dealer might be able to explain some terms of a finance agreement, it is a good idea to speak with the finance provider directly to discuss any questions you may have before signing the contract.
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