Finance

Coming to the End of Your Car Finance Deal? Here’s What to Do Next

April 4, 2025 | Written By: Daniel Kelly

As your car finance agreement comes to an end, it’s normal to wonder what happens next. You might feel unsure whether you should keep your car, return it, or trade it in for a newer model.

Fortunately, you have several straightforward options. Knowing these can help you make an informed decision that matches your finances and personal circumstances.

In this guide, you’ll learn:

  • The main options available at the end of your finance agreement.

  • What to consider before choosing your next step.

  • Clear actions to take as your finance deal nears its end.

Understand Your Car Finance Agreement Type

The options available depend on your car finance type. Here’s a quick refresher:

Hire Purchase (HP)
Once your final payment is made, you own the car outright. There’s no balloon payment, and your obligations end once the final monthly payment clears.

Personal Contract Purchase (PCP)
At the end of PCP, you have three options:

  • Pay the final balloon payment to own the car.

  • Return the car and walk away.

  • Trade the car for a new finance deal.

Personal Loan
If you used a personal loan, you own the car as soon as your final payment is complete. There’s no further payment or action required.

Understanding your finance type helps you clearly see which options are available.

Your Main Options at the End of Car Finance

Depending on your finance agreement, you’ll generally face three possible options:

Option 1: Keep the Car

Keeping your current car is straightforward if you’re happy with it.

  • With HP or Personal Loan: You own the car automatically after your final payment.

  • With PCP: You must pay a balloon payment to own the vehicle outright. Check this amount carefully, as it can be substantial.

Option 2: Return the Car

With PCP agreements, you can simply hand the car back to the dealer at the end of the contract.

To return the car:

  • You must have kept within the agreed mileage limits.

  • The vehicle needs to be in good condition, minus reasonable wear and tear.

  • You avoid the balloon payment entirely.

This option suits you if you no longer need the car, want to avoid a large final payment, or plan to switch to a different vehicle.

Option 3: Trade-in or Upgrade

If you’d prefer a newer or different vehicle, trading in your existing car is a convenient choice:

  • Your current car’s value (after finance) goes towards your next deal.

  • You can often arrange a new finance agreement simultaneously.

  • It can provide flexibility and an easy upgrade path.

This option is popular for drivers who regularly update their cars or whose needs have changed.

Things to Consider Before Making Your Decision

Choosing the right option depends on several practical factors. Consider:

  • Your car’s market value: If it’s higher than the balloon payment, keeping or selling your car privately could be beneficial.

  • Vehicle condition and mileage: If mileage is above the agreed limit or the car is damaged, returning it might incur additional charges.

  • Affordability of the final payment: Be honest about whether you can comfortably afford the balloon payment without financial stress.

  • Your future needs: Think carefully about whether the car still suits your lifestyle or if an upgrade or change is necessary.

Taking time to reflect ensures you choose the best solution for your personal circumstances.

Next Steps to Take When Your Finance Ends

To avoid surprises, start taking these practical steps 2–3 months before your agreement ends:

  • Contact your lender early: Ask clearly about the final payment amount, process, and available options.

  • Check your car’s market value: Use online valuation tools or dealer quotes to gauge whether keeping or returning the car makes sense.

  • Review your credit report: If considering a new finance agreement, make sure your credit score is healthy to secure good terms.

  • Explore finance options early: Compare new deals carefully to ensure you get the best possible rates.

If you’re unsure about your options or eligibility for new finance, consider using a specialist finance broker.

Want to know your finance options now? Check Your Finance Eligibility Here

What if You Can’t Afford the Final Payment?

Sometimes the final balloon payment on PCP agreements can be higher than expected. If this payment becomes unaffordable, don’t panic—you have several solutions:

  • Refinance your balloon payment: Another lender may offer affordable monthly repayments instead of one large payment.

  • Discuss flexible terms with your current lender: They may offer an extended payment plan or restructuring options.

  • Trade the car in: You can use the equity (if available) towards another car with a more manageable finance deal.

Taking proactive steps can reduce financial stress and keep you in control.

End of Car Finance—Your Next Steps

As your finance deal ends, remember your three main options clearly:

  1. Keep your car by paying the final payment (or automatically with HP/personal loans).

  2. Return your vehicle if it suits your circumstances (mainly PCP agreements).

  3. Trade-in or upgrade your vehicle if you prefer something newer or different.

Be proactive:

  • Assess affordability.

  • Understand your car’s market value.

  • Contact lenders early.

  • Check new finance options in advance.

By planning ahead, you can transition smoothly into your next financial decision.

Want to explore your car finance options easily? Check Your Eligibility Today