If you’re returning a car on finance, its condition can affect what you owe when the agreement ends. So it helps to know where normal use stops and chargeable damage starts.
Your car doesn’t have to look brand new.
What is fair wear and tear on a car on finance?
Fair wear and tear on a car on finance means the expected, acceptable deterioration caused by everyday driving and normal use. Your finance provider considers the car’s age and mileage when assessing whether that wear is reasonable.
Small stone chips, fine surface scratches and light interior scuffs may count as fair wear and tear, depending on your provider’s limits. You can think of them as the small signs of use that develop even when you’ve looked after the car.
The British Vehicle Rental and Leasing Association (BVRLA) publishes an industry guide to assessing returned cars, but your agreement may use its own return standard. Ask your finance provider which one applies, because that’s the standard your car will be judged against.
When does fair wear and tear matter on car finance?
Fair wear and tear matters when you return the car to your finance provider. Your options at the end of the agreement decide whether a return assessment happens at all.
With Personal Contract Purchase (PCP), you can hand the car back instead of making the optional final payment, often called the ‘balloon payment’, and the provider will then check its condition and mileage. Or you can pay the balloon payment and keep the car. Then there’s no hand-back inspection and no damage charges.
Hire Purchase (HP) normally ends with you owning the car once you’ve made the required payments. But you can also return an HP or PCP car early through voluntary termination.
Your liability under voluntary termination is capped at half the total amount payable, including the balloon payment on PCP. If you’ve paid less, you’ll pay the difference. And you still have to take reasonable care of the car, so handing it back early doesn’t remove the possibility of damage charges.
What condition is acceptable when you return the car?
Acceptable return condition depends on your provider’s return standard, which takes the car’s age and mileage into account. If the car was used when you got it, the provider should also allow for its condition at the start of the agreement.
Check these areas before collection:
| Area | Signs of normal use that may be acceptable | Issues that could lead to a charge |
|---|---|---|
| Bodywork and paint | Shallow surface marks or small chips within your provider’s limits | Scratches exposing primer or metal, larger dents, broken paint or poor repairs |
| Glass, mirrors and lights | Minor surface marks permitted by your provider’s standard | Cracks, broken mirror glass, damaged lamps or chips needing repair |
| Wheels and tyres | Light rim scuffs within your provider’s allowance and normal, even tyre wear | Bent or dented rims, tyre cuts or bulges, uneven wear or tyres below legal requirements |
| Seats and interior | Light creasing, fading or small scuffs from everyday use | Burns, tears, persistent stains, strong odours or broken fittings |
| Equipment and records | Required keys, accessories and servicing records present | Missing items or incomplete evidence of required servicing |
Does servicing affect the return assessment?
Yes, servicing can affect the return assessment if your agreement requires you to maintain the car to the manufacturer’s schedule. So hang on to the service record and receipts. They’re your proof of what work you’ve had done.
Unresolved warning lights and faulty equipment need sorting before the return, too. Your handbook explains what each warning message means. But if one points to a fault, contact your provider now rather than leaving it until collection.
When could you face damage charges?
Damage charges can apply when your car has damage outside the agreed return standard at hand-back. The amount depends on the damage and the terms of your agreement.
There isn’t one price for every scratch or dent. And a provider can still charge you if it sells the car unrepaired, because the charge covers the lower price the damaged car is likely to fetch.
The Financial Ombudsman Service compares each disputed item with the industry return standard and asks whether the damage would affect the car’s resale value. It has told providers to waive charges for marks too small to matter. Yet it has accepted charges for damage that would need repairing before sale.
So it’s worth asking your provider to explain each item on the bill.
Is excess mileage part of fair wear and tear?
No, excess mileage sits outside fair wear and tear, because your mileage allowance is a separate term in your contract. Going over that allowance may lead to an additional charge when you return the car at the end of the agreement.
Driven further than you planned? A car can meet the condition standard and still exceed its mileage limit. So check the allowance and the charging rate in your contract, or estimate the cost with our PCP excess mileage calculator.
But voluntary termination is different. If you end the agreement early that way, the Financial Ombudsman Service has generally found that providers can’t add excess mileage charges.
What happens at the car return inspection?
The car return inspection checks your car against your provider’s condition requirements, and an inspector records anything that could lead to a charge.
Some providers do the full inspection at collection. Others take the car away and examine it later at another site. Ask which process yours uses, and when the condition report will arrive.
Try to be at the handover if you can. It’s your chance to see exactly what’s recorded before you sign, and to ask the representative to note anything you disagree with on the collection record. Then keep a copy.
How can you prepare your car before returning it?
Preparing your car before return gives you time to deal with possible damage and gather the items your agreement requires.
1. Check the return instructions early
Get your provider’s condition guide and collection checklist before arranging any repairs. We’d suggest doing your own check 10 to 12 weeks before the return date, which leaves time to put problems right.
2. Examine a clean, dry car
Wash the car and let it dry before checking the paintwork in good light. Water can hide marks.
Work around every panel first, then move on to the wheels, glass and interior, so nothing gets missed.
3. Gather the keys, equipment and records
Check the collection checklist against what you have. This could include spare keys, a locking wheel nut key and equipment supplied with the car.
Confirm how your provider wants evidence of servicing. If something is missing, ask what replacement it will accept before buying one.
4. Compare professional repair costs
A professional repair before return could cost less than the provider’s charge, so get a quote for any damage outside your provider’s allowance. Check the provider’s requirements for the repairer and the finished work first, because poor repairs can still lead to a charge.
5. Photograph the car before handover
Take clear pictures of the outside and interior shortly before collection, including close-ups of any marks you’re unsure about. Photograph the mileage reading too.
Keep those images with your handover record and repair receipts, since they’re your evidence if you later dispute a charge.
What can you do if you disagree with a damage charge?
You can challenge a damage charge if you think the finding or the amount is wrong. Your own photographs and collection record can help show the car’s condition at handover.
- Ask for the evidence: Request an itemised explanation, the inspection report and photographs of the alleged damage.
- Compare it with the return standard: Set each finding against your provider’s standard and explain exactly which items you dispute.
- Complain to the finance provider: Make a formal complaint to your provider first, because it must have the chance to respond before the Ombudsman can step in.
- Go to the Financial Ombudsman Service: You can generally refer the complaint after an unsatisfactory final response, or if the provider hasn’t sent one within 8 weeks. You usually have 6 months from the final response to do this.
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