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PCP Finance

Personal Contract Purchase (PCP)

What is a Personal Contract Purchase?

A Personal Contact Purchase or PCP as it is known in short is slightly different to a conventional hire purchase car finance agreement. It is becoming more popular over recent years and has some benefit’s and can sometime’s be more attractive to customer’s as they can afford a more expensive car for less monthly payments.

Payments would be made over an agreed period of time, anything from 2 – 4 Years and at the end of the finance term you can.

  • Hand the car back with no additional payments required.
  • Part Exchange the vehicle with us for a new finance deal.
  • Decide to fully buy the car outright by paying the Guaranteed Future Value figure often refereed to as the “balloon” payment.

It is important that you have a reasonably accurate understanding of what annual mileage you would be doing if you decided to just hand the car back. As should you go over the agreed mileage limitation you will be charged an additional sum on a pence per mile basis.

Should I consider Personal Contract Purchase PCP?

A Personal Contract Purchase PCP style of agreement is typically suited to our customers who wish to change their vehicles regularly with us, but have a requirement to having lower monthly finance figures. The option is yours to purchase the car outright at the end of the agreement.

Because this style of car finance agreement is flexible it is best suited and sometimes only available to those with a good credit score. This car finance option may not be available to those with a poor or bad credit score.

Personal Contract Purchase PCP can be cost effective in keeping your monthly payments lower then Hire Purchase, however you should maybe think of it as renting a car for a couple of years but also have the option to buy at the end. However typically the majority of our customer’s would talk to us about part exchanging and taking our a new finance agreement with us.

RAC Dealer

An Example of how a PCP deal could work for you.

BMW 535d M Sport Saloon Automatic priced at £28,750 the PCP Calculation would be:

  • Initial Deposit of £500 and then £369 per month over 48 months.
  • After the 4 years, you can hand the car back, part exchange or make a one-off payment of £9,280 (Balloon or Guaranteed Future Value) to then own it outright.

An Example if you part exchanged with Click Motors

If you Part exchanged the above BMW 535d M Sport we would price the car at the current market value. Work out what equity you may have and role it into a new PCP finance deal for you.

  • Customer owes £9,280 to finance company, would rather part exchange then pay balloon payment
  • Click Motors value car at £10,500 in current market value
  • £10,500 valuation less finance settlement of £9,280 leaves customer with equity and a new deposit of £1,220 for new PCP car finance deal
  • Customer chooses new vehicle to purchase. Left over deposit is rolled over into new deal
  • Happy customer in a new car with continued low car finance payments

Check out our stocklist today. You can use our PCP Car Finance Calculator to work out what the payments would be on your desired car.

If you have any questions on how Personal Contract Purchase works call us today on 01268 766722.