the way a PCP works is you put an initial deposit down and then pay monthly payments- the agreement is that at the end of the contract (or before the end if you choose) you can do one of 2 things:
hand the car back and start again
pay the balloon payment and keep the car
the finance company are only interested in what you've done to the car if you are handing it back to them- as they will assume responsibility, and the effective depreciation accumulated by additional miles.
If your intention is to buy the car at the end of the period, then additional mileage / modifications you have on the car dont matter, as your assuming ownership.
This is where option 3 comes in. You spec up a new car with a dealer (doesnt have to be BMW) and they give you the cash value for the car (trade in)- you pay the finance off with the cash they gave you (effectively the balloon payment), you keep the residual as deposit for your new PCP
- you just have to wait until the balloon payment = the part-ex value of the car- which is usually 2.5-3 years after the car is purchased.
this is how multiple dealers and external people explained it to me
[NOTICE: i wont be held responsible if any of the above is inaccurate, or does not apply to your contract
]