Click4Gap Logo

Can You Modify a Car on Finance?

Understanding vehicle modifications and their impact on car finance agreements…

When it comes to making ‘car modifications’, it can evoke images of colossal aftermarket spoilers, slick alloy wheels, or robust performance upgrades. However, modifications aren’t always so flamboyant and can often involve subtle alterations such as adding a tow-bar, upgrading your stereo, or switching to LED lights.

Surprisingly, these seemingly minor changes are likely to be considered ‘modifications’ by your finance company. Thus, it is essential to know your position as to whether you are getting your vehicle ready for an exhibition or just making a few tweaks.

Car Modifications: What Happens If You Bend the Rules?

This discussion primarily revolves around loans backed by a vehicle, typically part of hire purchase agreements, personal contract purchase (PCP) deals, or any other type of loan where the vehicle serves as collateral.

Why do Finance Companies Frown Upon Car Modifications?

Finance companies prefer vehicles in prime, original condition, suitable for resale. Consequently, modifying a financed car, especially major alterations to the engine, interior, or body, could potentially degrade its value.

What Do Finance Companies Consider As Modifications?

Any alterations, significant or subtle, that alter the vehicle’s initial cost can be classified as modifications. This includes changes to:

  1. Performance mechanisms: This could involve upgrading the engine, exhaust, brakes, or gearbox.

  2. Aesthetic aspects: Any change to the vehicle’s interior or exterior appearance, such as colour, decorative paintings, or wheels, is deemed a modification.

  3. Towing systems: Adding new towing equipment can also be considered a modification by finance companies.

  4. Entertainment systems: Upgrading or adding a screen could be seen as a significant change.

Always remember, your decision to modify should be in line with the finance agreement. Discussing potential modifications with the finance company is highly advisable.


Related Reading: Everything You Need To Know About Engine Remapping & Car Chipping


Modifying a Car Under HP and PCP

While it’s possible to modify a car under a Hire Purchase (HP) agreement or Personal Contract Purchase (PCP), it comes with caveats. Primarily, while you’re still paying off the vehicle, you don’t technically own it, so any modifications should be approved by the legal owners – the finance company.

Furthermore, if you’re allowed to make modifications, don’t hastily proceed without getting written confirmation from the finance company. Otherwise, it’s recommended to wait until you’re the legal owner before making any changes.

The Do’s and Don’ts of Modifying a Financed Car

Remember, your financed vehicle isn’t a precious artifact in a museum. It’s a functional machine that will inevitably experience wear and tear. While some parts may require refinements or replacements, it’s important to understand what constitutes a permissible modification.

For example, adding removable objects such as seat covers or phone holders typically doesn’t require approval from the finance company. However, replacing tyres or other consumables might require notifying the company. Always avoid using anything that could potentially damage the vehicle, as maintaining its initial value is the company’s primary concern.

Does Increasing the Car’s Value Justify Modifications?

If your finance company agrees with your proposed enhancements, then yes. However, remember that finance companies are not car performance experts and often prioritise the vehicle’s original condition. Any cosmetic or performance changes might shift the car’s category, potentially deterring prospective buyers.


Related Reading: What Modifications Affect Car Insurance?


Pre-modification Checklist

Before rushing into modifications, ensure you:

  1. Review your finance agreement: This document will outline what you can and cannot do with the vehicle. If the document forbids modifications, violating these terms can land you in trouble.

  2. Communicate with your finance company: Regardless of your modification plans, it’s crucial to discuss them with your finance company. Always request written confirmation of their agreement.


Related Reading: What Are The Most Expensive UK Car Repairs


Potential Consequences of Modifying a Financed Car

Unauthorised vehicle modifications could lead to penalties, including full payment requirements for the car within a stipulated period. Additionally, if you return a modified vehicle to the finance company, its auction value could be considerably lower than the original price, potentially resulting in extra costs for you.

Modifying a Car Upon Full Payment

Once you’ve completed your payment obligations and officially own the car, you’re free to make any desired modifications. Until then, it’s advisable to avoid making significant changes to the car to prevent potential issues and complications.

In conclusion, while modifying a financed vehicle is possible, it’s filled with potential pitfalls. Carefully considering the rules and seeking professional advice is always the best approach.

Final Thoughts

Modifying a financed car is not a straightforward process, and it’s crucial to consider all factors involved. With the knowledge of the legal, financial, and practical implications, along with understanding the position of your financing company, you can make an informed decision.

Remember, every modification should enhance your driving experience without jeopardising the integrity, safety, and value of your vehicle.


Related Reading: Car Lease vs Contract Hire vs HP vs PCP: What Is The Difference?


Can You Modify a Car on Finance? FAQs

Q1: Can I modify a car I’ve purchased with finance?

Yes, it’s possible to modify a financed car; however, modifications must be in line with your finance agreement terms. Before making any alterations, it’s critical to consult with your finance provider to ensure that you aren’t breaking any contractual obligations.

Q2: How does car modification impact my finance agreement?

Modifying your car can impact your finance agreement significantly. Any alterations that decrease the vehicle’s value may violate your agreement, potentially leading to financial penalties or even contract termination. Always discuss your modification plans with your provider to avoid such outcomes.

Q3: Are there specific modifications allowed for financed cars?

The permissible modifications for a financed car vary widely between finance providers. Some may allow minor modifications such as window tinting or new wheels, while others might strictly prohibit any changes. It’s always wise to verify these details with your provider beforehand.

Q4: What happens if I modify my car without informing my finance company?

If you modify a financed car without notifying your finance company, you risk breaching your agreement. This could lead to serious consequences, including additional charges or repossession of the vehicle. Communication with your provider is crucial when considering any modifications.

Q5: Can car modifications impact my insurance premiums?

Yes, car modifications often affect insurance premiums. Modifying a vehicle can increase the risk associated with it, leading to higher premiums. Insurers must be informed of any modifications to ensure that your cover remains valid.


Related Reading: Car Buying vs Leasing: Pros & Cons To Help You Decide


Q6: Is it possible to finance car modifications separately?

Yes, there are finance options available specifically for car modifications. These can help spread the cost of expensive upgrades over a longer period. Keep in mind, though, that adding another finance agreement on top of your car finance might affect your overall financial situation.

Q7: How do I obtain permission to modify my financed car?

To get permission for car modifications, reach out to your finance provider directly. Provide detailed information about the planned modifications so they can assess whether they’re permissible under your current finance agreement.

Q8: Can I modify a leased car?

When it comes to leased vehicles, modifications are typically more restricted compared to financed cars. Most leasing companies require the car to be returned in its original condition, barring minor wear and tear. Always consult your lease agreement or your provider before attempting any modifications.

Q9: What are the potential consequences of unapproved modifications on a financed car?

Unapproved modifications to a financed car can lead to several consequences. These include voiding warranties, incurring penalties from your finance provider, or even facing a contract termination. In some cases, modifications can also lead to insurance invalidation.

Q10: What types of car modifications commonly cause issues with finance agreements?

Modifications that significantly alter the car’s performance, safety, or value can cause issues with finance agreements. This includes engine tuning, body kit additions, extreme suspension changes, and unconventional paint jobs. Always consult your finance provider before undertaking any such modifications.


Related Reading: Negative Equity on Car Finance: What It Means to You