Can you modify a financed car?

Amelia Scholey, Brand and Creative Manager, Tuesday, 21 March 2023
Updated: Tuesday, 16 May 2023

If you have a car on finance, you might be curious to know how much freedom you have when it comes to modifying it. Maybe you would like to give your car a new paint job, change the rims, or upgrade the stereo.

Modifications are a great way to make the car unique to you, but are you allowed to make these changes? While modifications are usually ok if you own the vehicle outright, they may present problems if you’re paying off a car finance agreement. They may also affect your insurance so you should also bear this in mind.

Our guide will explore whether modifications are allowed, how it changes for the type of vehicle you have, and the consequences of going against the agreement with your finance company.

Are you allowed to modify a financed car?

In most cases, you aren’t the full owner of the vehicle, and won’t be allowed to modify the car. Some lenders may allow customers to modify the vehicle, but you need to get their consent first. It depends on your agreement, so check your contract or contact your lender if you are unsure.

It’s important to take your time when thinking of buying a new car. It can be a very exciting time but make sure you thoroughly check the car to ensure it has everything you need. For more information please see our guide which describes the checks you should make when buying a car.

To become the legal owner, you must complete all your repayments. Then, depending on the car finance type, you might have to:

  • Make an ‘option to purchase’ fee in a Hire Purchase (HP) agreement, or
  • Make a balloon payment in a Personal Contract Purchase (PCP) agreement.

You must wait to pay this fee and receive confirmation of ownership to make changes to the car, even if you plan to take ownership in the future.

Conditional Sale (CS) is slightly different. Once you’ve made your final repayment, you’ll become the vehicle’s legal owner. If you would like to learn more about this Conditional Sale finance, read our guide – what is CS finance?. However, you usually can’t modify the car while you’re still in the agreement.

In a PCH agreement, you will never own the vehicle as it is a leasing agreement. For this reason, you won’t be allowed to make modifications to the car.

To find out more about the different types of car finance and how they work, take a look at our guide – how does financing a car work?

Can you modify a car financed through a personal loan?

Unlike car finance agreements such as HP, PCP, CS or PCH, personal loans aren’t usually tied to the vehicle itself. This means that you paid for the vehicle in full and are the legal owner. This means you can modify the vehicle how you are like. Make sure any modifications are done safely and legally, and don’t invalidate your insurance or make it more expensive.

We’ve written a guide that explains the differences between car finance and a personal loan, so you can understand them better and make an informed decision.

What does it mean to modify your car?

Modifying a car is when you make a change to a car that makes it different from the manufacturer’s original specifications. Modifications can change the appearance or performance of the vehicle.

Some common modifications include:

  • Cosmetic changes: Changing the colour, installing new wheels, diffusers, spoilers, window tints, light upgrades, and adding body kits.
  • Performance upgrades: This includes even slight adjustments to the engine, suspension, gearbox, brakes, exhausts, etc.
  • Equipment upgrades: Adding a tow bar, upgrading the battery, changing the sound system, installing custom seats.
  • Entertainment changes: Upgrading the stereo or changing the infotainment system.

This is not an exhaustive list, so it’s essential to check with your car finance company to understand if you’re allowed to make any changes – even the smallest part or detail might be considered a modification.

This doesn’t mean you can’t replace parts if you need to get the car serviced. Changing tires, the oil filter, and small things like this are fine. Nor does it mean you can’t add seat covers or a phone holder to the car. Something like replacing a battery is usually ok but changing it to a different spec could be classed as a modification.

What if the modifications increase the car's value?

Modifying your car may seem like a win-win situation if the changes increase its value, but it’s not that straightforward. Modifications do not always have good resale value.

Upgrades to the performance or appearance may enhance the car. But the finance company will have trouble determining the new value of the modified car. Modifications that are not easily reversed, such as a rear spoiler or custom paintwork, may decrease the car’s value compared to its original factory appearance.

Most lenders simply won’t allow any vehicle modifications until you own the vehicle, even if the modifications increase the value.

What happens if I modify a financed car?

Most modifications to a vehicle can be reversed, including engine and performance changes. However, the ability to modify a car while under a finance agreement depends on the finance company’s policies. They often view temporary modifications as permanent because they can affect the car’s value.

Modifying a financed car without the lender’s approval can put you in a difficult position. The finance company may terminate the agreement and give you a deadline to pay off the finance in full. Depending on the type of modification(s), you may be charged according to your contract.

The best thing to do is to check with your lender before making any changes to your car.

Why you should always check your finance agreement

As with all significant financial commitments, it’s essential to review the finance contract thoroughly. If the contract states that you cannot modify the car, there probably won’t be much flexibility.

If you have specific modifications in mind, such as installing towing equipment, speak with the car finance company. This way, you’ll receive clear answers and avoid any confusion.

FAQs about modifying a car on finance

Car modifications can negatively impact a car’s value and make it harder to sell if you give your car back to the finance company at the end of the agreement. Modifications may also cause safety concerns and affect the vehicle’s insurance coverage.

This depends on the finance company. They may view temporary modifications just like permanent ones, as they can alter the car’s value, or because it costs to remove them.

Additionally, if modifications have not been reported to the insurance company, it could result in having the insurance voided.

Before making any modifications, it’s best to check with your finance company and insurer.

Any modifications, including changing the colour or paintwork of a car, might not be allowed under your agreement. Contact your lender before making any changes to the car’s paint.

Whether you can remap your car on finance depends on the lender and your agreement. If in doubt, check your contract, or speak to your lender.

It’s important to inform your finance provider about any modifications you would like to make to the car. They can then explain whether this is allowed under your agreement.

If you’ve already made changes without informing them, you should notify them immediately. Failure to do so means you may have violated the terms of your agreement. It could also invalidate your insurance or affect how much you need to pay for insurance.

Ultimately, it’s best to wait to modify the financed car until you’ve made the final payment and the car is legally yours.

If you have a car on finance, you might be curious to know how much freedom you have when it comes to modifying it. Maybe you would like to give your car a new paint job, change the rims, or upgrade the stereo.

Modifications are a great way to make the car unique to you, but are you allowed to make these changes? While modifications are usually ok if you own the vehicle outright, they may present problems if you’re paying off a car finance agreement. They may also affect your insurance so you should also bear this in mind.

Our guide will explore whether modifications are allowed, how it changes for the type of vehicle you have, and the consequences of going against the agreement with your finance company.

Are you allowed to modify a financed car?

In most cases, you aren’t the full owner of the vehicle, and won’t be allowed to modify the car. Some lenders may allow customers to modify the vehicle, but you need to get their consent first. It depends on your agreement, so check your contract or contact your lender if you are unsure.

It’s important to take your time when thinking of buying a new car. It can be a very exciting time but make sure you thoroughly check the car to ensure it has everything you need. For more information please see our guide which describes the checks you should make when buying a car.

To become the legal owner, you must complete all your repayments. Then, depending on the car finance type, you might have to:

  • Make an ‘option to purchase’ fee in a Hire Purchase (HP) agreement, or
  • Make a balloon payment in a Personal Contract Purchase (PCP) agreement.

You must wait to pay this fee and receive confirmation of ownership to make changes to the car, even if you plan to take ownership in the future.

Conditional Sale (CS) is slightly different. Once you’ve made your final repayment, you’ll become the vehicle’s legal owner. If you would like to learn more about this Conditional Sale finance, read our guide – what is CS finance?. However, you usually can’t modify the car while you’re still in the agreement.

In a PCH agreement, you will never own the vehicle as it is a leasing agreement. For this reason, you won’t be allowed to make modifications to the car.

To find out more about the different types of car finance and how they work, take a look at our guide – how does financing a car work?

Can you modify a car financed through a personal loan?

Unlike car finance agreements such as HP, PCP, CS or PCH, personal loans aren’t usually tied to the vehicle itself. This means that you paid for the vehicle in full and are the legal owner. This means you can modify the vehicle how you are like. Make sure any modifications are done safely and legally, and don’t invalidate your insurance or make it more expensive.

We’ve written a guide that explains the differences between car finance and a personal loan, so you can understand them better and make an informed decision.

What does it mean to modify your car?

Modifying a car is when you make a change to a car that makes it different from the manufacturer’s original specifications. Modifications can change the appearance or performance of the vehicle.

Some common modifications include:

  • Cosmetic changes: Changing the colour, installing new wheels, diffusers, spoilers, window tints, light upgrades, and adding body kits.
  • Performance upgrades: This includes even slight adjustments to the engine, suspension, gearbox, brakes, exhausts, etc.
  • Equipment upgrades: Adding a tow bar, upgrading the battery, changing the sound system, installing custom seats.
  • Entertainment changes: Upgrading the stereo or changing the infotainment system.

This is not an exhaustive list, so it’s essential to check with your car finance company to understand if you’re allowed to make any changes – even the smallest part or detail might be considered a modification.

This doesn’t mean you can’t replace parts if you need to get the car serviced. Changing tires, the oil filter, and small things like this are fine. Nor does it mean you can’t add seat covers or a phone holder to the car. Something like replacing a battery is usually ok but changing it to a different spec could be classed as a modification.

What if the modifications increase the car's value?

Modifying your car may seem like a win-win situation if the changes increase its value, but it’s not that straightforward. Modifications do not always have good resale value.

Upgrades to the performance or appearance may enhance the car. But the finance company will have trouble determining the new value of the modified car. Modifications that are not easily reversed, such as a rear spoiler or custom paintwork, may decrease the car’s value compared to its original factory appearance.

Most lenders simply won’t allow any vehicle modifications until you own the vehicle, even if the modifications increase the value.

What happens if I modify a financed car?

Most modifications to a vehicle can be reversed, including engine and performance changes. However, the ability to modify a car while under a finance agreement depends on the finance company’s policies. They often view temporary modifications as permanent because they can affect the car’s value.

Modifying a financed car without the lender’s approval can put you in a difficult position. The finance company may terminate the agreement and give you a deadline to pay off the finance in full. Depending on the type of modification(s), you may be charged according to your contract.

The best thing to do is to check with your lender before making any changes to your car.

Why you should always check your finance agreement

As with all significant financial commitments, it’s essential to review the finance contract thoroughly. If the contract states that you cannot modify the car, there probably won’t be much flexibility.

If you have specific modifications in mind, such as installing towing equipment, speak with the car finance company. This way, you’ll receive clear answers and avoid any confusion.

FAQs about modifying a car on finance

Car modifications can negatively impact a car’s value and make it harder to sell if you give your car back to the finance company at the end of the agreement. Modifications may also cause safety concerns and affect the vehicle’s insurance coverage.

This depends on the finance company. They may view temporary modifications just like permanent ones, as they can alter the car’s value, or because it costs to remove them.

Additionally, if modifications have not been reported to the insurance company, it could result in having the insurance voided.

Before making any modifications, it’s best to check with your finance company and insurer.

Any modifications, including changing the colour or paintwork of a car, might not be allowed under your agreement. Contact your lender before making any changes to the car’s paint.

Whether you can remap your car on finance depends on the lender and your agreement. If in doubt, check your contract, or speak to your lender.

It’s important to inform your finance provider about any modifications you would like to make to the car. They can then explain whether this is allowed under your agreement.

If you’ve already made changes without informing them, you should notify them immediately. Failure to do so means you may have violated the terms of your agreement. It could also invalidate your insurance or affect how much you need to pay for insurance.

Ultimately, it’s best to wait to modify the financed car until you’ve made the final payment and the car is legally yours.

 
Amelia Scholey, Brand and Creative Manager
Bringing you information on how to look after your vehicle, save money and enjoy your life on the road.
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