Personal Contract Purchase (PCP) finance

Thinking about financing your next car on a Personal Contract Purchase (PCP) agreement? To make things easier, we’ve broken it down to help you decide if it's right for you.

How PCP works

PCP is a finance plan where you pay a deposit followed by fixed monthly instalments, followed by an optional final payment. It allows you to spread the cost of the car over a period of time and could be the right option if you like to change your car regularly.

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PCP might be right for you if you:

  • Are thinking of changing your car in a few years time.

  • Want to make lower monthly payments with the option of a balloon payment at the end to own the car.

  • Want a more expensive model with lower monthly payments.

“The whole process was so easy, from start to finish, the courtesy calls we received were well timed, friendly and informative. The finance for our PCP was all done electronically and with no fuss.”

Andrew Knight

What happens at the end of the agreement?

The length of your agreement can be between 24 and 48 months and you have three options when it ends:

  1. You can hand the car back to the lender
    The car needs to be in good condition and within the agreed maximum mileage or you may need to pay additional charges. Most lenders will pick up the car but it’s worth checking the terms of your finance agreement.

  2. You can change the car for another one If the actual market value of the car is higher than what the lender predicted, you can put the difference towards a new agreement, subject to your financial status.

  3. You can buy the car At the end of the agreement there will be a 'balloon' or 'optional final payment'. This is the predicted value of what the car will be worth and is also the final amount you’ll need to pay if you want to own the car. If you decide to make this payment, including any purchase fees, you’ll then own the car.

Alternatives to PCP finance

Hire Purchase (HP) is another option if you’d like to own the car at the end. You pay higher monthly instalments to become the car's legal owner and there’s no final balloon payment.

Popular questions about Personal Contract Purchase

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