UK drivers are drawn to car modifications’ ability to enhance a vehicle’s performance and/or aesthetics. These upgrades can also reflect the drivers’ personality and help them connect with a larger community of modification or mod enthusiasts.
Movies often paint a dramatic portrait of car mods, which can raise questions about their eligibility—especially within the context of a finance agreement. For example, The Fast and the Furious movie franchise helped popularize nitrous oxide (NOS), a mod used to temporarily boost a vehicle’s power. Other common mods include tinting windows, adding a spoiler, and altering suspension.
So, can you modify a financed car? While it’s possible to modify financed vehicles, it depends on the type of finance agreement—with some being stricter than others. Our guide will highlight the most common types of car finance, whether they’re compatible with modifications—and if so, how.
Keep reading to learn more about how mods can impact your auto finance and hurt areas like your wallet.
Common car finance agreements and modifications
The most common types of car finance in the UK are Personal Contract Hire (PCH), Personal Contract Purchase (PCP), Hire Purchase (HP), and personal loans.
Personal Contract Hire
Personal Contract Hire car finance, or leasing, generally prohibits any modifications since you don’t own the vehicle. Instead, it’s helpful to consider a Personal Contract Hire agreement as a long-term rental. After a Personal Contract Hire term concludes, you’ll hand back the keys and walk away.
Exceptions to Personal Contract Hire lenders’ stance on modifications are rare—and if you gain approval, it’s typically for a minor alteration that can be reversed at the end of a term. You can expect to receive a penalty fee if you install a modification that breaks the leasing agreement. If you want to add modifications to a lease, evaluate different Personal Contract Hire lender terms to find a match with some flexibility and get explicit written permission before signing your name.
Personal Contract Purchase
Personal Contract Purchase auto finance involves a borrower paying less money month-to-month since payments cover the vehicle’s depreciation instead of its total value. As a result, the driver doesn’t own the car.
After a Personal Contract Purchase agreement ends, the driver can attain full ownership by paying the vehicle’s remaining value through a balloon payment and an option-to-purchase fee. Once you achieve ownership, you won’t need the original lender’s permission for modifications. However, you will need the lender’s clear permission for modifications during the finance term.
Similar to leasing or Personal Contract Hire finance, it’s rare for a Personal Contract Purchase lender to approve modifications during a term since many people opting for this finance type don’t plan on becoming a car’s full owner. Instead, they’re prioritizing lower monthly costs.
Hire Purchase
Hire Purchase financing offers more flexibility for vehicle modifications than Personal Contract Hire or Personal Contract Purchase agreements since monthly payments go toward the car’s total value. However, during the finance term, checking your lender’s conditions for modifications is vital.
It’s not unusual for Hire Purchase lenders to prohibit modifications in customer contracts. Still, drivers should request written permission from their Hire Purchase lender if they can’t find any information or restrictions on vehicle changes within the agreement.
Personal loans
Unlike Personal Contract Hire, Personal Contract Purchase, and Hire Purchase finance, you won’t need permission from your lender to begin modifying a car since you’re the legal owner after using the loan to pay the seller. The only restriction drivers with a personal loan face with modifications is following the law with whatever they decide to change.
What counts as a modification?
Earlier, we provided a general definition of vehicle modifications. Still, those entering or currently in a car finance agreement can use a more comprehensive understanding of the practice to avoid making and getting penalized for modifications that break the finance agreement’s terms.
The two primary types of vehicle modifications are cosmetic and performance.
Cosmetic modifications
Cosmetic car mods are typically more noticeable than their performance counterpart and can include but aren’t limited to:
- Body kits
- Paintwork
- Front/rear bumpers
- Wheel accessories
- Rooftop vents
- Tinted windscreens
- Light lens tints
- Back bumper reflector lights
- A custom hood ornament
- Interior LED lighting
- Dashboard customisation
Vinyl wraps, which involve changing a vehicle’s exterior color without altering its original paint, are considered a modification in the UK despite their reversible and legal nature.
Performance modifications
Performance modifications may include brake, suspension, engine and drivetrain, steering, or filtration alterations.
While some performance modifications are less noticeable than cosmetic work, those in Personal Contract Hire or Personal Contract Purchase agreements are at a higher risk of getting penalized by lenders for unauthorized changes since the car will be or is likely to be returned, thus not approved for alterations.
There’s also a risk for penalties with unauthorized Hire Purchase modifications since a lender may discover evidence if the vehicle gets returned to a dealer for something like a recall order where the dealer can use diagnostics to detect changes.
Additional risks of modifying a financed car
Modification risks extend beyond lender penalties. For example, mods can impact your car’s insurance, warranty status, resale value, and even result in trouble with the law.
Vehicle modifications and insurance
First, you must disclose every car modification to your insurance provider, even ones that don’t significantly impact areas like safety. Insurance agencies form your rates based on the level of risk you pose. Modifications could make your vehicle more valuable, increasing its likelihood of theft, cause repairs to become more expensive, and raise your chances of getting into an accident.
Insurers also can’t guarantee the quality of a modification’s parts, whether the installation was correct, and how changes can affect performance. Failing to notify your insurer of a modification can result in a loss of coverage.
Warranty status
It’s common for drivers to hear about how modifications can void their car’s warranty. However, warranty voids will only occur if you use incorrect parts and an unapproved engineer performs the mod.
You can find an approved engineer by contacting your insurance provider for a list of resources. Your automaker may also have service centers or partnerships with engineers approved for aftermarket modifications.
Legality
A modification is legal if it aligns with safety, emissions, and roadworthiness laws. Cars with significant changes to areas like the ECU may have to repeat an Individual Vehicle Approval test, which first occurs before the automobile goes to market. MOT tests can also reveal if a car with modifications meets safety, emissions, and roadworthiness laws. Drivers are required to get MOT approval three years after the vehicle is first registered and once a year after.
Ready to modify your financed car?
It’s helpful to define your goals before requesting modification approval from a lender or undergoing changes yourself using something like a personal loan. Knowing what you want to improve or alter, along with your budget, will help you meet vital criteria like finance, insurance, and legal approval.Are you interested in pursuing a finance agreement like Hire Purchase to increase your likelihood of mod approval from a lender? Visit our page on Hire Purchase finance to streamline your application with tools like a car finance calculator, additional information on the benefits of Hire Purchase, and a soft credit check with no damage to your rating.
