Can I be charged for damage when I hand back a PCP car?

Yes. Whether you hand the car back at the end of a PCP or end the agreement early by voluntary termination, the lender can charge for damage beyond fair wear and tear. On voluntary termination the legal test is whether you took reasonable care of the car, and in practice lenders and the ombudsman measure that against the BVRLA standard.

Last reviewed 13 November 2026. Every figure links to its source.

The legal position

Section 100 of the Consumer Credit Act 1974 says that if you have not taken reasonable care of the goods, the amount you owe on termination is increased to compensate the lender.¹ Your agreement will also set out the return condition, usually by reference to fair wear and tear.

How the ombudsman treats it

PCP and hire purchase are regulated agreements, so the Financial Ombudsman Service can look at the charges. In a decision about a car returned by voluntary termination, the ombudsman applied the BVRLA 50mm wheel limit, cut a £240 bill to £80, and told the lender to waive collection fees and remove adverse credit information linked to the charges.²

Points that differ from a lease

• Age. A PCP car handed back at four years, or a used car on hire purchase, is older than a typical lease return. The ombudsman takes the car's age and mileage into account.³
• Mileage. If you end the agreement early, check how the mileage allowance has been reduced for the shorter term.
• The half rule. Voluntary termination limits what you owe on the finance once half the total amount payable has been paid. It does not remove damage or excess mileage charges.

What to do

1. Ask for the inspection report and photographs.
2. Check each line against the fair wear and tear limits.
3. Complain in writing, then go to the ombudsman within six months of the final response if needed.