PCP car finance – damage and fair wear and tear
Fair wear and tear – when normal usage causes deterioration to a vehicle – is expected by finance companies, but anything more might cost you money
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What is fair wear and tear?
When you get a car on Personal Contract Purchase (PCP) finance, there’s the option to give your car back at the end of your deal and go for something new.
If you skip the final ‘balloon payment’ on a PCP deal and return your vehicle, you’ll need to make sure that all damage to the car is beneath the acceptable level of ‘fair wear and tear’. This covers what the finance company is willing to accept as normal damage from regular use.
Handing a PCP car back with more damage than what is classed as fair wear and tear could mean you’ll need to pay for damages.
The BVRLA offers guidelines for what is acceptable as fair wear and tear for finance and lease cars, so you’ll know from the offset what is allowed.
Why does fair wear and tear on your car matter?
Fair wear and tear is something to consider while using your finance or lease car so you avoid damage charges at the end of your agreement.
If your car is damaged more than what you’d expect from normal usage, you might be asked to pay these charges.
Large dents, scrapes and bodywork damage are usually outside what is considered fair wear and tear, as are smashed windows, missing items like keys, and tyres that don’t meet legal standards.
Will I be charged for damaging my finance car?
If you’re planning to pay your final balloon payment and take ownership at the end of your PCP finance deal, damage charges on your car won't be an issue. This is because you won't be returning your car to the lender.
You also don’t need to worry about damage charges and fair wear and tear if you’re on an HP finance deal or used a personal loan, as you won’t be returning your car unless you choose to terminate your car finance early (in the case of HP).
Damage charges will also apply to lease cars.
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Fair wear and tear guide
When it comes to returning a finance or lease car, there are a few things to look out for to determine if you’ve gone over the accepted level of fair wear and tear.
Light scratching to the windows that are not in the driver’s line of sight is acceptable
Any chips and cracks in windows must be professionally repaired
Small chips to the paintwork are allowed, and scratches and scrapes up to 25mm
Tyres must meet the legal requirements, light scratching and scuffs are allowed
The car must be clean, with the full set of keys and any locking wheel nut keys
All lamps and lights must work, minor scuff marks are acceptable
Wheel dents are not acceptable
Returned finance or lease cars are usually assessed using the BVLRA guidelines for fair wear and tear, so you can check a copy of this before the car inspection.
If unsure, you should always check with your lender’s requirements to ensure you’re meeting its standards. Not doing this could mean you miss something important and land you with those damage fees.
How much are PCP damage charges?
The figure for damage charges you’ll be asked to pay will depend on your specific situation. The lender will consider the amount of damage to the car and how much it will cost to repair.
You might also be charged for going over a set mileage allowance, but this will also depend on your circumstances and the agreement you initially made with your lender.
The best thing to do is to reach out to the lender and ask about its damage policy. You might also have details like excess mile charges set out in your contract.
If you have some damage to your finance or lease car that’s over the guidelines for fair wear and tear, you might want to get it professionally repaired before your car is inspected when you return it.
Sorting the repairs yourself means you can shop around for the best deal – just make sure all work is up to a high standard and carried out by the pros.
PCP return car inspection
If you decide to return your PCP car to the finance company, or if your lease contract has come to an end, your car will be inspected to check its condition.
Using the BVRLA guidelines, your lender will assess the vehicle and look for any damage that doesn’t fit the criteria.
If your car is too dirty to be checked properly, you may also be charged for this.
You’ll also find that the level of fair wear and tear changes depending on your contract. Lenders will appreciate that the car will have higher signs of usage if the contract is longer.
Cars that have been contracted to cover 10,000 miles will likely have more signs of wear than those that have covered 5,000, for example.
Once your car has been inspected, you’ll be informed if you’re required to pay any damage charges and will have the opportunity to dispute them should you think they’re unfair.
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How to avoid finance car damage charges
If you know there’s a chance you might return your PCP finance car at the end of your contract, it’s a good idea to take some extra care to monitor damage and keep it to a minimum.
Keep it clean: regularly cleaning your car will give you chance to check out the paintwork, freshen up the interior, and ensure your car is not damaged by the elements.
Handle damage when it happens: if you do damage your car beyond fair wear and tear, it’s a good idea to get it professionally repaired before it gets worse. Even a simple window chip can worsen over time, so it’s best to sort it quickly.
Maintenance is key: regular servicing and maintenance is important for keeping your car in the best possible condition, but making sure you have all documents and extras in your car is just as important. Losing important paperwork or misplacing a locking wheel nut can be a real pain if you leave it until the last minute.