What Happens At The End Of a PCP Agreement?

The end of a PCP finance agreement is looming, but as a used car dealer with a finance partner – what options do you have and who assumes responsibility for the car at the end of it. Here’s our definitive answer on how we will work with you to either secure another deal and another car, or how we can move forward with the customer.

With a personal contract purchase agreement, the customer will have a few different options when they come to the end of the term. Here’s an outline of the options and what obligations you have as a dealer, what we have as a finance provider, and what the lender has too.

Handing the car back to the lender

The first option and one of the most popular is handing the car back to the lender. This is the business or body that has given the finance, so no responsibility falls to the dealership or broker. The customer may get in touch with the dealership for advice and guidance, at which point you can show them the direction of the lender and offer support in them handing back the car, which will build on your relationship and credibility as a dealer.

Paying a balloon payment to keep the car

If the customer would like to keep the car at the end of the agreement, the balloon payment should be made to the lender and finance provider. The customer is then free to drive away in their car without further payments, although as you will know this isn’t the most popular option with PCP agreements.

Part exchanging the car

This is where the opportunity for the dealer and the broker lies. As long as you have maintained the relationship with the customer over the course of their agreement and have contacted them for updates and potentially services if that is something you offer – they should come back to you should they want to part exchange at the end of the agreement.

They will bring their current car and use its value as a part exchange for a different car. We can then explore different financing options together, should the customer want to look at another finance agreement.

Octane Finance work with dealers to fuel their finance and we have a panel of trusted lenders, so we can cater for prime, near prime and sub-prime deals. If you are interested in working with us, please get in touch and speak to one of our Business Development Managers.