What Happens at the End of a Personal Contract Hire Agreement?

If you’ve entered into a Personal Contract Hire (PCH) deal, there are a few options available to you when the contract ends. You can choose to purchase the car, by making a balloon payment, upgrade to a new model, or simply return the vehicle.

Of course, your options may vary, depending on things like the initial deposit, and any restrictions in your contract, such as mileage usage. To help you gain a better understanding of each of these options, we’ve outlined them in more detail below:

Make a Balloon Payment

Should you wish to keep your current vehicle, you can make what is known as a balloon payment. The balloon payment is however much the car is worth once the agreement ends. This will be determined at the start of your contract, so you’ll know what to expect.

As an example, say you bought a car for £8,000, and the finance agreement was over three years. In this time, your vehicle is expected to depreciate in value by 70%. So at the end of the three years, the car will be worth around £2,400. This is what you’d be paying as a balloon payment.

If you do decide to buy your leased car, and make a balloon payment, you don’t need to worry about returning the vehicle in a great condition. Though you’ll probably want the car to remain in good shape for your own sake!

balloon payment

Upgrade Your Lease Car

If you’re looking to upgrade your vehicle to a newer model, you can do this in three simple steps. First, you should speak to your current provider. When your lease is coming to an end, they’ll probably get in touch with you to discuss your options anyway, and to arrange a suitable date to collect your current car.

Chances are, your provider will be able to offer you a new deal, but you may want to explore your options a little more, before committing to another lease agreement. This takes us to step two – comparing deals to find the best one for you. This may sound like a lot of hassle, but it doesn’t have to be! There are plenty of companies out there who can help you find a great vehicle finance deal. For instance, if you work with Wheelie Good Finance, we’ll not only help you connect with a lender, we can also work with you to find your next set of wheels.

The final step of your vehicle upgrade process is to return your current car, and finalise the details on your new vehicle. You can arrange with your provider the best time to collect your leased vehicle, and then either pick up your new car or get it delivered to your door. Just bear in mind that the standard delivery time is between two and three weeks, so make sure you start getting things in place early!

Return Your Vehicle

You may decide that you don’t want to purchase your current vehicle, or enter into a new PCP agreement, for whatever reason. Perhaps you’re looking to buy a vehicle outright, or would prefer to enter into another agreement. If this is the case, you can simply hand back the car when your contract finishes, providing that you’ve met the leasing conditions there’s nothing extra to pay.

Most leasing companies will contact you at least a few months before your term comes to an end, to arrange collection of your vehicle. Though don’t assume yours will – you may need to reach out first, especially if you’re not completely sure what date your lease ends. You wouldn’t want to return the car late, and incur additional fees.

The process of returning your vehicle should be incredibly simple. You’ll just need to work with your lease company to figure out all the details.

PCP ends

Condition of Your Lease Vehicle

In regards to the two latter options – upgrading or returning your car – you do need to make sure that your vehicle is in good condition when you hand back the keys. Obviously the leasing company won’t expect the car to look brand new, but you should not exceed regular wear and tear. For more information on what constitutes regular wear and tear, you can check out our blog post on the topic.

It’s also important to remember that before your vehicle is collected, there are a few things you’ll want to do. In order to prepare for the collection, you should:

  • Locate all the paperwork pertaining to your vehicle, such as the handbook, service history, and the V5C registration document
  • Make sure you have found anything else that came with the car, like a spare set of keys, or remove things that didn’t come with the vehicle, like a bike rack
  • Clear the car of any personal belongings, and thoroughly clean it – preferably by a professional valet service

If you have damaged your leased vehicle, you should inform both your insurer and leasing company straight away. The latter may have preferred garages for the repairs to be done, and should coordinate with your insurer regarding the claim. Any such repairs will be noted, and when you return the vehicle, they’ll be taken into account. There may be penalty charges for excessive damage, or if you have made an insurance claim. You can contest damage charges if you believe they are unreasonable though.

Overall, the key thing to keep in mind is that you should keep in contact with your leasing company. Should anything go wrong, if you want to ask questions about your contract, or when the time comes to return the vehicle, it’s essential that you talk to your lease provider.

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