What do I do if my car finance agreement ends during the coronavirus crisis?

If your car is on a personal contract purchase plan and you’re due to hand it back soon, you'll need to know how to do this during the Covid-19 pandemic...

Finance is cheaper than cash

Most new cars are bought on personal contract purchase (PCP) schemes and a growing number on personal lease deals. If your car is on one of these and it's due to end soon, you should be able to discuss this with dealership staff online, and to visit a showroom from 1 June to look at other potentially suitable cars.  

Although showrooms closed in March due to the coronavirus crisis, many retained a small number of staff who were responding to customers either online or by phone. So your best course of action is to contact the supplying dealership and the finance company to discuss your options. 

In normal circumstances, you have three options at the end of a PCP deal: hand the car back and walk away, use any equity left to start another PCP deal on a new car, or pay the optional balloon payment and keep the car.

If you want to buy the car outright, this should be possible without you having to visit a dealership at all. The money can be transferred online and you can then take ownership of the car.  

 If you were thinking of changing to a new car, this is also possible, although there may be a delay between ordering a new car and it being ready for you to collect, so it may be easier for you to agree to extend the contract term by a few months. If you're not sure which car you want as a replacement, doing this will also give you time to look around and choose a suitable car. 

You don't have to take the car back to the dealer who sold it to you, but it's worth speaking to them first because they're likely to want your repeat business, so they should offer you a good deal on a replacement car. 

If you're struggling to make the monthly payments for the car, it's worth speaking to the dealership about switching to a cheaper model to reduce costs. 

Alternatively, if you want to end the agreement on time, it may be possible for the car to be collected from your home – find out more here. Before handing the car back, you’ll need to ensure all the frequently touched surfaces are wiped down with disinfectant, and that the keys are left in a secure but accessible place.

Car being serviced

A growing number of car servicing departments have introduced collection and delivery for cars that need to be serviced. It's highly possible they can arrange this for those at the end of a PCP deal too, so it's worth asking about this too if you're vulnerable to the virus and aren't currently leaving home. 

If it’s part of the agreement that the car has remedial work done or is valeted prior to being handed back, you may be able to arrange this via the supplying dealer or by a mobile mechanic/valet company at a convenient time at your home. Again, the car keys can be left out so that close contact with other people is avoided. 

When the car is ready to go back, you’ll need to agree with the dealership or finance company on the best way to sort out the relevant paperwork, and any necessary payments, but all this should be possible online or on the phone. 

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Read more: all the latest coronavirus advice for drivers >>

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