PCP car finance: How to avoid charges when you return the keys

PCP costs and charges

Personal Contract Purchase (PCP) and Personal Contract Hire (PCH) have helped hundreds of thousands of motorists to drive a new car. The finance schemes have become vastly more popular in recent years, with 90 percent of new private vehicles now bought this way.

However, there is a catch. At no point, unless you pay a ‘balloon’ fee at the end of the agreement, do you own the car you’re driving. That means you have to give it back and, for many, that means unexpected costs. We look at the reasons for these – and how to avoid them.

If you’re unclear on how the different car finance options work, check out of our handy guideOur list is informed by DMN, a company that completes thousands of leasing inspections and collections every year. 

Condition and equipment PCP costs and charges

Just as you wouldn’t buy a dirty car that was missing lots of equipment, nor does a dealer want to take one back once a lease contract is up. Make sure your car is spick and span on hand-back day, or potentially face a £45 cleaning bill.

Spare keys and tyre inflation kits commonly incur fines if they are missing. A lost key could set you back £250 or more, while a missing tyre inflation kit could cost up to £120.

Another common item that people remove from their cars, never to put back, is the parcel shelf. Supply the car with this fitted or potentially face a £100 fine.

Stamp that service bookPCP costs and charges

Most of us would avoid buying a car without a proper record of servicing. Thus, it will cost you if maintenance hasn’t been kept to the car manufacturer’s schedule.

Charges begin in the hundreds for handing back a lease car that hasn’t been serviced as required.

Don’t pile on the miles

Most, if not all, PCP and PCH contracts come with a mileage limit. Whether your annual mileage ‘spend’ is 5,000 or 15,000, you will feel the pinch upon the car’s return if you exceed it.

Charges per excess mile can range from 3p to 72p, according to Parkers. That means a 10,000-mile per-year contract that you’ve exceeded by 6,000 miles could cost between £540 and £4,300.

Follow the above advice and you should be fine. Keep the car clean and serviced, give it back with everything it came with and watch your mileage. To be extra sure – and this should go without saying – read the terms of your finance agreement very carefully. Do so well in advance, so you have time to ready your car for its return.

PCP costs and charges

“Experience tells us people often neglect the same things when it comes to end of vehicle contracts, which can often end up costing them unnecessarily,” explained Nick Chadaway, managing director of DMN.

“It’s these small details which, potentially, can add up to costly outlays. With a little bit of foresight and planning, these pitfalls can be easily avoided, saving drivers both money, time and stress.”