Can You Modify a Car on Finance in the UK?

What counts as a modification and why finance changes the rules

Modifying a car on finance is not just a styling choice - it is a contractual decision. If your vehicle is on PCP or HP, you do not own it until you settle the agreement or make the optional final payment. The lender has a legal interest in the asset, which means anything that may affect safety, value or insurability usually needs written permission.

In practice, lenders often allow reversible, sensible upgrades that do not harm resale value - think manufacturer-approved accessories or premium tyres. They typically object to changes that are permanent, illegal, performance-altering without certification, or that could inflate insurance costs. Your finance agreement will spell out what needs consent, what counts as fair wear and tear, and what must be put back to stock before return.

Insurance matters just as much. Most UK insurers require full disclosure of every modification, cosmetic or performance-related. Undeclared mods can invalidate a policy after a claim. If a lender becomes aware the car is uninsured or improperly insured, you could be in breach of your finance agreement.

Recent developments in car finance also matter for your wider rights. Following an August 2025 Supreme Court decision, lenders must clearly disclose commission arrangements, their size and nature, with fairness duties upheld. The FCA is finalising a GB-wide redress scheme due early 2026 for PCP and HP agreements from 2007 to 2024 where commissions were undisclosed or unclear. Most eligible consumers will be contacted directly and average payouts are expected to be around £700 per agreement. While this does not change modification rules, it clarifies your consumer protections and who is responsible for fair treatment - primarily lenders rather than dealers.

Small changes can have big consequences - get written permission first, tell your insurer, and keep receipts so you can restore to stock if needed.

Who should read this

If you currently finance a car, van or motorbike on PCP or HP, or you are considering a customisation before handing a vehicle back, this guide is for you. It is also useful if you plan to settle finance early, part-exchange a car with aftermarket parts, or exercise voluntary termination and want to avoid end-of-agreement charges. UK drivers curious about how the FCA’s upcoming redress scheme interacts with historic finance deals will also find clarity here. Kandoo’s aim is to help you navigate what is allowed, what it costs, and what to do if your finance was not fairly disclosed.

Your practical choices

1. Ask for lender permission and proceed with reversible, insurer-approved mods.

2. Delay modifications until you own the vehicle outright after settlement.

3. Choose manufacturer-approved accessories that preserve warranty and value.

4. Fit upgrades but retain originals to refit before returning the car.

5. Skip performance mods and focus on maintenance-quality improvements.

6. Voluntarily terminate or settle early if you want full modification freedom.

Money, impact and risk at a glance

Can you qualify to modify - and what about redress rights

Eligibility to modify during finance boils down to your contract. PCP and HP agreements typically require written consent for alterations that change appearance, performance or structure. Some agreements allow minor cosmetic tweaks, provided they are reversible and professionally fitted. If your plan ends with a return rather than purchase, you should expect to restore the vehicle to manufacturer specification to avoid excess charges.

Separate to modifications, eligibility for finance redress now has clearer guardrails. PCP and HP finance from April 2007 onwards may be in scope if commission arrangements were not adequately disclosed. The FCA’s scheme, expected in early 2026, is set to streamline refunds, with many consumers contacted directly by lenders. Average redress is proposed at around £700, with some cases including interest adjustments plus 8% simple interest. If you suspect poor disclosure, complain to your lender now. If you have already complained, you generally do not need to do anything further before the pause lifts on 31 May 2026.

Kandoo can help you understand your agreement’s modification rules and what the upcoming redress framework might mean for you as a UK borrower.

Step-by-step to stay compliant

1. Read your PCP or HP agreement modification clause carefully.

2. List intended changes and gather part specifications and invoices.

3. Ask your lender in writing for permission with full details.

4. Get insurer confirmation of cover and any premium change.

5. Use reputable, VAT-registered installers and keep receipts.

6. Notify DVLA if changes affect body type, engine or colour.

7. Retain original parts for refit before hand-back or sale.

8. Reconfirm with lender and insurer after installation is complete.

Weighing it up

Read this before ordering parts

Before you commit, consider the end game. If you plan to return the car at PCP maturity, anything that cannot be cost-effectively reversed risks a condition charge or a lower valuation against the guaranteed future value. Performance upgrades without supporting certification can trigger MOT issues or invalidate warranty cover. Your insurer must be told about every modification - even cosmetic - so budget for a premium change. Keep a paper trail: lender consent, installer invoices, photos before and after, and proof of restoration if you revert to stock.

There is also a parallel consumer rights track you should not ignore. The Supreme Court’s 2025 ruling places a clear onus on lenders to treat customers fairly and disclose commissions, while the FCA’s scheme due in early 2026 should handle most eligible redress without claims firms. The FCA and SRA have warned against multiple representations and unreasonable fees by claims companies, and misleading advertising has been actively removed. If you think your finance involved undisclosed commissions, complain to your lender now so your case is in scope when the complaints pause lifts on 31 May 2026. Firms must keep relevant records until April 2031, supporting long-term claims.

Alternatives if you want freedom to customise

1. Buy the car outright then modify at will.

2. Settle the finance early to become the legal owner first.

3. Choose a car already modified with proof and insurer acceptance.

4. Lease accessories through the manufacturer’s approved options.

5. Wait until agreement end, purchase with the optional final payment, then upgrade.

Common questions

Q: Can I remap an engine on a PCP car? A: Only with explicit lender approval and insurer acceptance. Remaps can affect reliability, MOT emissions, warranty and resale value, so most lenders are cautious.

Q: What if my insurer will not cover a planned modification? A: Do not proceed. Driving with inadequate disclosure or cover may invalidate your policy and breach your finance agreement, exposing you to significant costs.

Q: Will I be charged at hand-back for tasteful cosmetic mods? A: If not restored to stock, yes in many cases. Keep original parts, refit before return and document the restoration to avoid excess charges.

Q: How do new UK rulings affect me if I suspect undisclosed commissions? A: Lenders now have clearer disclosure duties. The FCA expects to finalise a scheme in early 2026, with average payouts around £700. Most eligible customers will be contacted directly.

Q: Should I use a claims management company for car finance refunds? A: Usually not. Regulators say most consumers will not need a third party. Using one may reduce your payout and risks duplicate or invalid representations.

Q: When will complaint handling resume? A: The FCA plans to lift the pause on 31 May 2026, following scheme implementation. Firms must retain relevant records until 11 April 2031 to support claims.

Q: Are dealers liable if I was mis-sold due to commissions? A: The Supreme Court clarified that dealers do not have to prioritise consumer interests over their own in commission deals. Fairness responsibilities primarily sit with lenders.

How Kandoo can help

Kandoo is a UK-based retail finance broker that helps you understand the small print before you spend. We can explain what your agreement allows, flag insurer considerations, and outline your options if you want to modify or settle early. If you suspect commission non-disclosure, we will guide you on how to complain directly to your lender and what to expect from the FCA’s upcoming scheme. Speak to Kandoo before you change a bolt.

Important information

This article provides general guidance only and is not personal financial or legal advice. Finance agreements and insurer policies vary by provider. Always obtain written consent from your lender and confirmation from your insurer before modifying a financed vehicle. Regulatory timelines and outcomes may change as final FCA rules are published.