More or less what RT says. Your PCP will specify an agreed final value. At end of lease period you can pay that and own car outright. Alternatively you can return it and owe nothing albeit subject to excess mileage and charge for any damage such as scratches and dings. If you trade it for another form same mfr/dealer you migh get some 'equity' if they assess cars value as greater than agreed final value plus excess miles and damage etc. Overdoing the mileage is a killer if you return or trade the car.

We bought a 1.9D Berlingo on a PCP in March 2005. Was intended to be a second car to my 110/HDi X reg Xantia until 2008 at which time, both kids at senior school, we'd review our motoring needs. We though 9k annual mileage would be fine for either my station run or Mrs B's commute to a nearby town.

In fact the Xantia promptly threw its cambelt and then had a problem with HP injection system which meant the 'lingo was press ganged into doing the July 05 family holiday to France. Although lacking aircon it was so much more suited to family transport due to space around rear seats that it stayed in role right up to this summer.

At three years old it was on nearly 40k rather than 27k envisaged in the lease agreement. Fortunately we had the capital to pay the £3.5k final value. The 13k excess miles at 9p a mile would have been a pretty penny (nearly £1200k) and of course it had picked up a few battle scars as well for which we'd also have been penalised.

In event it's been a super car and I'm still driving it today as it approaches 150k miles.

Edited by Bromptonaut on 02/02/2014 at 18:59

The whole point of a PCP is that you only borrow the amount of the depreciation and any residual value belongs to the finance company - so you don't/can't trade it in - unless you pay the original residual value written into the contract to aquire the the car first.

If you hand the car back at the end, it goes to the finance company - I imagine they make arrangements for collection and probably take it straight to auction.

Thanks for reply RT,

Am aware that vehicle and residual belong to finance Co until cleared as does HP agreements. As I remember you can PX a car that is on HP with the selling dealer sorting the outstanding finance.

With a PCP I understandI you can turn vehicle in at end of term and walk away, pay the baloon figure and keep vehicle or use any residual and change vehicle.

Of the three options above the question is:-- does one have to use the supplying dealer for the franchise, any same franchised dealer or a dealer of a different franchise?

Peg