Can you modify a car on finance?

Roman Danaev

13 April 2022

If you have purchased a car on credit, you may want to modify it. You won't have any problems with this if you own the vehicle outright. But if you're halfway through paying off a car financing agreement, you may have serious problems and risk termination. Read on for more information about whether you can modify a car on finance.

Why companies don’t want you to modify a car on finance?

Financing companies are interested in receiving vehicles that are in good, original condition and ready for resale. In other words, it isn't advisable to modify a financed car, since any major modifications to the car's engine, interior, or body would diminish its value.

What do car finance companies consider to be modifications?

Modifications can be drastic changes in functionality or that might be subtle alterations. No matter what, a company's key interest is to preserve the initial price of the vehicle. Adding something means changing the price of a car! And the company detects modifications if you alter:

  • Performance mechanisms. For instance, you might upgrade the engine or the exhaust. Other examples include modifying the brakes, gearbox, and so on.
  • Cosmetic looks of a vehicle. Everything that alters the look of a cars’ interior or exterior falls into this category. So, the colour, decorative paintings, wheels — these count as cosmetic changes.
  • Towing systems. If you think that your financed car requires new towing equipment, remember that the finance company will view it as a modification.
  • Entertainment tools. Replacing or adding a screen seems like a profound upgrade. Yet, the company might be against that.

No matter what you choose, your decision must fit the finance agreement. Contacting the finance company to talk about it is always a good idea.

Can you modify a car on HP?

The answer is yes, but there is always a 'but.' Remember that HP (hire purchase) means that you own a vehicle solely once you’ve paid the full price. While you are still making a monthly payment, you are not the legal owner. That means that the terms and conditions from your finance company are still active. The contract might not say anything about modifying your vehicle. If that is the case, you can modify the car. But first and foremost, you must talk about it with the legal owners.

If your finance company does not veto the alterations, do not hurry to change the wheels or replace the stereo. Ask them for written confirmation. If they do not provide it, it is advisable to hold off on any enhancements until you become the legal owner.

Can you modify a car on PCP?

While choosing PCP (that stands for personal contract purchase) is a stable and flexible option, it does not come without conditions. Moreover, many people choose this path because they do not plan to become legal owners. Many drivers choose to return vehicles they had on PCP as buying them is expensive.

Yet again, you must consult the car finance company. It is rare for them to permit a major modification. Most of the time, finance companies do not accept anything but the original condition of their vehicle. But if there is the green light to perform alterations — modify the car as you intend.

What modifications can you do to a financed car?

Remember that your financed vehicle is not a porcelain vase under glass in a museum. It is a functional machine that is being used continually, and such things tend to wear out. The result of usage is apparent — some parts of your car will need refinement or replacement.

Also, minor details don’t necessarily mean lengthy talks with your finance company. For instance, you might want to add seat covers. You can do it without hesitation as you can take them off again quickly. So, phone holders and other removable objects are not an issue.

The question of consumables is another story. For instance, replacing tires might be something you have to tell your finance company about. But the practice shows that such problems can be solved in seconds. Still, you shouldn’t use anything that may prove harmful to the car. If a low-quality item leads to damage, the company will show no mercy. And they have the right to that as their primary interest is sustaining the initial price of a vehicle.

We can draw a parallel with renting a house or an apartment. You have the right to add some décor, but only if we can take it away later. Placing a pot with flowers is fine, but driving in nails for a picture might be problematic. Damaging the furniture or electronics, in turn, is a violation of rules. And if you violate the contract, you’ll have several unpleasant consequences.

It’s the same with your car. The company records information about its initial state. Anything that decreases its value after your usage is your responsibility — solely.

Can I modify my car on finance if it increases the value?

Yet again, only if your finance company does not see anything harmful in your refinement concept. Still, note that the lenders rarely have profound knowledge about vehicle performance. In the end, the original condition of their possession is more important to them.

Also, cosmetic changes and additions to performance automatically change the category of a car. That means that potential clients might lose their interest in a particular vehicle. Also, your argumentation about its performance will be invalid if the contract has anything against that.

What to do before modifications?

Even if you have everything planned, do not rush. Consider all factors before you modify your financed car — in any way. There are two obligatory actions to take before you start implementing your plan for modifications. Neglecting these might be a reason for issues later! So:

Analyse your finance agreement

This document is your magistral instruction to what you can and cannot do if you are yet to become the legal owner. You won’t have a leg to stand on if the document forbids modifying the car on finance. So, if you violate any rules, no lawyer will be able to argue your side of the story.

If you have lost that document, do not make any moves before you find it or get another copy. It is advisable to print at least one copy of the agreement after obtaining the contract. Of course, there’s nothing to stop you from asking for a copy from the company that has given you the loan.

Text or call your finance company

No matter what ideas you have come up with, do not neglect to call the managers or other representatives. Yet again, minor changes like smartphone holders are nothing to worry about. But drastic changes demand the consent of both parties!

Also, ask the representatives to give you consent in a written form! Their agreement on the phone does not suffice — unfortunately. Sure, the finance companies are not deliberately deceptive, waiting for your slightest mistake to milk your wallet or purse. Still, having their agreement in a written form is safer. If the course of action alters acutely, you demonstrate the document — and you win. That written consent will also become a stark argument for the lawyers if the situation grows into a confrontation in court.

What happens if you modify a financed car?

If you have done it with the finance company's consent, nothing bad will happen. If you have not attained their permission, you may encounter issues. The most common scenario is that the client is asked to pay 100% for that car and become the legal owner. Usually, the companies give the future owner fourteen days to cover the cost in full.

What happens if you have to return your modified car to the finance company?

If your journey has ended here, then do not expect many positives. The car you have enhanced and modified becomes a commodity at auction. Even if your modification has bestowed positives to the vehicle, its price is likely to have decreased. Yet again, that also depends on how the auction flows. For instance, the car you have modified originally cost £15,000. The best price the legal owners get for that vehicle is £13,000. That means that you must pay £2,000 to cover the initial price.

Another scenario is that the buyer pays more than the settlement figure. In its original condition, the car cost £15,000, but let’s assume the buyer pays more than this. In that case, the finance provider gets 100% of the revenue. You, in turn, can only be glad that the lender will not demand extra payment. But all the upgrades have become a gift for the new owner.

If you can return a modified car to its original state, is it okay to modify a financed car?

Even major changes can be reversible. For instance, you can replace the engine and reinstall the old one later. Still, any alteration of the vehicle’s state requires time and money. If something happens and the lender wants to value the car immediately, you encounter a problem that you cannot bypass.

Imagine the worst scenario: unfortunately, the car is involved in an accident. The company has yet to discover that you have modified it. In that case, no insurance will save you. The lenders will see that you have added or removed something. That means that the value of the car drops automatically. And even if it was a minor modification, the finance provider will consider the decreased value. In the end, you’ll have to pay 100% of the outstanding finance. At least the vehicle is now yours, eh?

So, modifying a financed car might be an option. Still, it may well damage your wallet or purse severely if there is an unexpected occurrence. Yet again, do not neglect the rules — playing it safe is always the wiser choice.

How does the car program work if I want to keep it at the end of the agreement?

Becoming the owner of the car means that you can modify it whenever you like. If you have made some adjustments right before paying for the full value, the lender will have zero interest in what you have altered. They will not even react as all upgrades, and cosmetic changes are no longer their business. So, you are the owner; it is your vehicle — enjoy bringing your character into it.

Yet again, before you become the registered owner, there are risks when you change anything on the car. It is advisable to temperate all changes before you make the final payment. Moreover, the modifications can wait. And having extra issues and potential dangers is not your goal, is it?

Contact our brokers for consultation

There are always pitfalls in major questions about modifying your car on finance. Whenever you require an explanation, do not hesitate to contact our brokers.