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What is a car administration fee?

When buying a car under PCP or HP, the car loan provider may ask you to pay an administration fee. You may have to pay this fee either with the first payment or as part of your monthly PCP loan payment.

Administration fee in detail

Administration fee is charged by dealers to cover their administration costs of working on a financing deal. The administration work may involve registering the deal on the system, digitization of financial documents, issuing necessary documentation, and so forth. Some providers may call administration fee as finance facility fee, processing fee, documentation fee, or acceptance fee. The fee is charged on both HP and PCP plans.

When is administration fee due?

You can pay this fee along with the first payment. Alternatively, the dealer may include the administration fee in your monthly installment.

Example:

You want to buy a Nissan Qashqai worth around £16,400. Along with the price, you will be asked to pay an administration fee of say, £180. You have the option to pay this £180 upfront. Otherwise, the dealer may add this amount to your car price to make your total to be repaid as £16580. The dealer will calculate your monthly payment on this amount.

You can use our PCP calculator to understand the implications of administration fee on your PCP deal.

iCalculator tip:

When purchasing a car under PCP or HP, make sure to confirm the administration fee and the mode of payment. It is better to pay off the administration fee right in the beginning. If you don't pay the administration fee upfront the amount is added to your monthly installments and you will end up paying interest!!