What happens if your PCP deal ends during the Coronavirus (COVID-19) lockdown?

  • Many buyers being 'stuck' with cars they don't want
  • Whether you pay insurance and tax can depend on which manufacturer you're with
  • Cars continue to not be collected because of lockdown

2020 Peugeot 2008

As Britain's lockdown continues due to the Coronavirus (COVID-19) pandemic, more and more drivers will be wondering how it affects them.

The biggest issue will be with PCP (Personal Contract Purchase) deals coming to an end. If yours is finishing up, and you don't want to pay your final payment (balloon payment), you'll be handing the car back.

One problem is that a lot of manufacturers aren't offering collection at the moment.

This leaves customers in a bit of a pickle.

What to do if your car is due to go back during Coronavirus (COVID-19) lockdown

If the car manufacturer is unable to collect your vehicle due to Coronavirus (COVID-19), the catch-all advice is to contact them.

Generally, if you're in this situation, it will work like this:

>> If you don't want to refinance, or extend your contract, you'll be able to use the vehicle - as long as you pay for tax and insurance.

>> If you don't want to drive it, the manufacturer or finance provider will cover the cost of insurance and tax. Although in most cases you'll need to sort it out yourself then claim it back.

>> Leasing works slightly differently. In most circumstances, customers who can't hand a car back and don't want to use it, will have their tax paid for without needing to claim it back.

>> Ultimately, different manufacturers work in slightly different ways. Keep reading to see what individual manufacturers are saying, or use the links below to skip to different car makers.

What manufacturers are saying:

Alpine
Audi
BMW

Bentley
Cupra
Dacia
Ford

Honda
Hyundai
Jaguar

Kia
Land Rover
Lexus

Mazda
Mercedes-Benz
Mini
Mitsubishi
Nissan

Porsche
Renault
SEAT
Skoda
Smart
Toyota
Vauxhall

Volkswagen
Volvo

What this means for you

Generally, if you're not paying that balloon payment and buying the car outright, AND, you don't want to drive the car, you won't have to pay for anything.

If you do want to use your car and you're not stumping up that final payment, some manufacturers are making you pay the tax and insurance yourself.

Different manufacturers have different terms and conditions. Keep reading to see how it affects you.

What car companies have to say:

2017 Lexus NX

BMW advice on handing a car back during lockdown:

(BMW, MINI)

BMW says: 'If collection of a customer's vehicle is delayed due to COVID-19 and a balloon payment is due, BMW Financial Services can support with a number of options if they do not wish to pay the balloon payment.

'Where a customer doesn't want to use their vehicle and wants to return it, even though it cannot be collected at present, BMW Group Financial Services will insure the vehicle but the customer needs to ensure it is left in a safe, secure place (such as a driveway) until collection can be arranged. In this case, BMW Group Financial Services will confirm the vehicle as SORN with the DVLA if it is on a Personal Contract Hire (PCH) agreement, as we are the 'registered keeper' of the vehicle.

'If the vehicle is on a Personal Contract Purchase (PCP) agreement, the customer will need to contact DVLA to SORN the vehicle (they can do so using DVLA's online service) which ensures they won't need to tax the car during this time.'

Ford advice on handing a car back during lockdown:

Ford says: 'Whilst the majority of the dealerships are not open in the UK, Ford Credit is offering customers due to hand back or trade in their current car during April or May additional time at the end of their contract to consider their options.

'We will be flexible and balance the availability of dealership services with the needs of the customer.'

Honda advice on handing a car back during lockdown:

Honda says: 'We are operating on a case by case basis with our customers. Clearly a number of collections have been postponed but we work with the customers to come up with agreeable solutions in these instances to ensure that they are happy. The tax and insurance payments are sorted on a case by case basis.'

Hyundai advice on handing a car back during lockdown:

Hyundai says: 'In line with current Government guidelines our agents cannot currently collect vehicles so there will be a delay with arranging a suitable date and time. Please be aware the vehicle must remain insured until collection can be arranged.

'Whether the tax and insurance will be covered will need to be discussed with Hyundai Finance directly.'

Jaguar advice on handing a car back during lockdown:

(Jaguar, Land Rover)

Jaguar says: 'If you wish to return the vehicle to us, we can arrange this for you. There will be a delay as the company that collects the vehicles for us is currently closed.

'If your end of contract date is more than 28 days away, you do not need to take any action at the moment.  Please come back to us when your end of contract payment date is within 28 days and we will tell you what to do.

'You must stop using the vehicle with effect from your end of contract date. This is the due date for your optional final payment.

'You can cancel your motor insurance after the end of contract date. We will arrange cover for the vehicle. You must not drive the vehicle as you will not be insured to do so.

'You can apply to the DVLA to SORN the vehicle so that you do not have to continue paying road tax. Usually, if you SORN a vehicle, it must be kept off a public road. The DVLA has confirmed that this is still the case but they may consider taking a more lenient approach if they think it is right to do so.

'You will need to keep the vehicle safe and in your possession until we collect it. We do ask that you ensure the vehicle is maintained. Please top up oil and water levels when needed and start the engine and let it run for 15 minutes each week.'

Kia advice on handing a car back during lockdown:

Kia says: 'Where feasible and safe to do so, we continue to operate PCP contracts according to their terms and vehicles are being collected from those customers who wish us to do so at the appropriate time. However customers do have a range of options open to them during this difficult period should they wish to retain the vehicle and change later.

'The customer is responsible for tax and insurance up to the moment we collect the vehicle in line with the terms of the agreement. We take on responsibility at collection – which will be in line with the terms.

'If the customer chooses to extend their ownership then they are responsible for tax and insurance.'

Mazda on handing a car back during lockdown:

Mazda says: 'Where possible, we are extending contracts (payment free) for three months providing the customer is willing to maintain insurance, VED etc.

'As most customers are requiring the use of the car, the extension option is proving popular. If we have an insistence form the customer to collect their end of contract vehicle we are currently operating with a logistics company that has strict guidelines and adherence to social distancing and appropriate PPE, enabling the car to be returned.'

Mercedes-Benz on handing a car back during lockdown:

(Mercedes-Benz, Smart)

Mercedes-Benz says: 'If it's currently not possible to collect or for a customer to return their vehicle at the end of their finance agreement due to the COVID-19 pandemic – then Mercedes-Benz Financial Services will support with insurance and vehicle tax costs.

'If a customer would rather keep hold of their vehicle to keep mobile, whilst they await their new car – Mercedes-Benz Financial Services will discuss options with the customer and work out the best possible outcome for them.'

Mitsubishi on handing a car back during lockdown:

Mitsubishi says: 'If a car comes to the end of its finance terms, we offer customers three options:

'1. Settle the balloon payment and retain the vehicle (the most common option in April).

'2. Delay the balloon payment for a month.

'3. Hand the vehicle back but keep the vehicle in their possession until it can be collected, not use it, cancel their motor insurance and SORN the vehicle.'

Nissan on handing a car back during lockdown:

Nissan says: 'We are working with Nissan Finance customers to support their own individual circumstances. Nissan Finance have solutions in place to ensure that customers should not incur any costs directly with regards to delayed vehicle collections due to the current COVID-19 pandemic.

'Customers who are due to have vehicles collected at the end of their agreements have been contacted and advised that we will collect their vehicle as soon as social distancing guidelines enable us and our agents to do so safely.'

Renault on handing a car back during lockdown:

(Alpine, Dacia, Renault)

Renault says: 'We are working with Renault Finance customers to support their own individual circumstances. We have solutions in place to ensure that customers should not incur any costs directly with regards to delayed vehicle collections due to the current COVID-19 pandemic.

'Customers who are due to have vehicles collected at the end of their agreements have been contacted and advised that we will collect these vehicles as soon as social distancing guidelines enable us and our agents to do so safely.'

Toyota on handing a car back during lockdown:

(Toyota, Lexus)

Toyota says: 'We have secured a blanket insurance policy to cover vehicles that customers are handing back but cannot be collected, via Toyota Insurance.

'That means that customers do not need to pay for insurance for the cars. Naturally, this insurance does not cover road use, but is designed for vehicles belonging to customers who would have had their cars collected in other circumstances. Consequently there's no cost to the customer unless they decide they want to continue to drive the car on the road, in which case they are still responsible for insuring it in the normal way.

'For road fund licence we cannot tax the vehicle, only the customer can do that as the registered keeper (we don't hold the V5). Clearly if the customer is not intending to use the car after what would have been the collection date they can simply inform DVLA of a SORN in the normal way and won't incur any costs. If they do decide to keep driving the car then they are responsible for taxing it in the usual way.'

Vauxhall on handing a car back during lockdown:

Vauxhall says: 'At present customers are not able to handback PCP end of term cars as the dealerships and auctions are closed.

'For those customers who have reached the end of term and do not wish to continue to use their vehicle, we are asking them to store their vehicles safely until they can be collected.

'We do recommend that vehicles are insured until they are collected or handed back, however we cannot insist on this. With regards to road tax, if the vehicle is being stored off-road and not being used, the customer has the option to SORN the vehicle, which means road tax is not required.

'We are working hard to support our customers and extending agreements where appropriate because ongoing mobility is important to them.'

Volkswagen Group on handing a car back during lockdown:

(Audi, Bentley, CUPRA, Lamborghini, Porsche, SEAT, Skoda, Volkswagen)

Volkswagen says: 'We are covering the cost to keep vehicles taxed and insured where they cannot be collected due to COVID-19.

'However, where customers want to continue using their vehicles they will be required to tax and insure the vehicle in line with the T&Cs of their agreement.

'When the current lockdown restrictions are lifted, we will be in contact with the customer regarding a suitable time to arrange collection.'

Volvo (Polestar, Volvo) on handing a car back during lockdown:

Volvo says: 'We have created a Coronavirus help page on the Santander Consumer website, which will be regularly updated as information and any changes to our products become available: www.santanderconsumer.co.uk/coronavirus

'We will be writing to customers that have PCP agreements that are due for completion in the next three months, offering them the option to refinance their GFV over a 12 month period if they wish to do so, keeping the monthly payment the same, as this will give them time to make an informed decision on the options available.'

Further reading

>> Coronavirus (COVID-19) advice for drivers

>> Car scrappage schemes: how much can you save?

>> 0% car finance: we explain it and list all of the current deals

>> The best new car deals

Nothing to report beyond the usual process, I.e anyone in difficulty should contact the company as soon as possible to discuss options.