Plain-English guide
End of Car Finance Agreement: Your Options
What happens when your PCP, HP or lease ends — and the choices you have at the finish line.
At the end of a car finance agreement you usually choose to keep the car, hand it back, or part-exchange it into a new deal — and the exact options depend on whether you're on PCP, HP or a lease. HP simply ends with you owning the car.
Here's what happens at the end of each agreement type, the choices in front of you, and how to work out which one is cheapest.
What are your options at the end of car finance?
At the end of car finance you can keep the car, hand it back, or part-exchange it — and on HP you simply own it outright. Which choices you have depends on your agreement type.
- Keep it: pay any final balloon (PCP) or just take ownership (HP).
- Hand it back: return a PCP or lease car within the mileage and condition terms and walk away.
- Part-exchange: roll any equity above the balloon into your next car.
End of a PCP: keep, hand back or part-exchange
At the end of a PCP you choose to pay the balloon and keep the car, hand it back and walk away, or part-exchange any equity into a new deal. The balloon (GMFV) decides ownership.
Pay the balloon — often through a new loan — and the car is yours. Hand it back, within the mileage and condition limits, and you owe nothing more. Or, if the car is worth more than the balloon, put that equity towards your next car. Run the figures on the PCP calculator, and check the balloon on the balloon calculator.
End of an HP agreement: you own the car
At the end of HP you own the car once you've made the final payment and a small option-to-purchase fee — there's nothing to decide. No balloon, no hand-back.
Because HP finances the whole price, the last instalment and the option fee transfer ownership to you automatically. The car is then yours to keep, sell or part-exchange whenever you like. See the full cost on the HP calculator.
End of a lease: hand the car back
At the end of a lease you hand the car back, with nothing more to pay if it's within the mileage limit and in fair condition. You never own a leased car.
The provider inspects the car against the agreement's condition standard and your mileage limit. Stay inside both and you simply return it and walk away; go over on mileage or damage and you pay the relevant charge. You can then start a fresh lease on a new car. Our mileage limits guide covers the excess charges.
Ending early instead of waiting
You don't have to wait until the end — you can settle early, or hand a PCP or HP car back once you've paid 50% under voluntary termination. Both can save you money.
Settling means paying the outstanding balance now and claiming the interest rebate — work it out on the settlement calculator. Or, once you've paid 50% of the total amount payable under the Consumer Credit Act 1974, sections 99 and 100, you can use voluntary termination to hand a PCP or HP car back and owe nothing more.
Which option is cheapest?
The cheapest option depends on the car's value against what you owe, so compare the figures before you decide. Equity points you toward part-exchange; negative equity changes the maths.
If the car is worth more than the balloon or settlement figure, keeping or part-exchanging captures that equity. If it's worth less, handing it back can be the smarter move — check where you stand on the negative equity calculator, then compare totals on the main calculator.
Frequently asked
What are your options at the end of car finance?
What happens at the end of a PCP agreement?
What happens at the end of an HP agreement?
Can you end a car finance agreement early?
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