Personal Contract Purchase (PCP)
A Personal Contract Purchase (PCP) agreement works much like Hire Purchase, but at the end of the deal you have a choice: you can either keep the car by paying off the final amount, or you can hand the car back - either to the dealership, or as part-exchange for another vehicle.
Buying a car through Personal Contract Purchase means you're leaving your options open. At the end of the deal, it's up to you whether you want to keep the car or not.
How Personal Contract Purchase works
- Pay a deposit of your choice, then
- Spread most of the remaining cost over 12-48 months, then
- Choose between:
- paying the remainder - and owning the car outright, or
- part-exchanging the car for another car, or
- paying nothing - and handing the car back.
Naturally, the car's condition (mileage and value) will need to be chacked if you choose to part-exchange it or hand it back.
Benefits of Personal Contract Purchase
- You decide the deposit. No need to wait while you save up.
- You decide the repayment term. Pay it back:
- quickly (lower overall cost, due to fewer interest payments), or
- slowly (lower monthly cost, but you will pay more in interest)
- Fixed monthly payments. Makes budgeting simple.
- Flexibility. Buy it, part-exchange it or hand it back - it's your choice.
How your Personal Contract Purchase payments are calculated
When we calculate how much your repayments will cost on a PCP plan, we take a look at the following:
- Initial cost of the car
- Your deposit
- Duration of your loan
- Interest on the amount borrowed
- Estimated mileage
- The "Minimum Guaranteed Future Value" - the remaining amount you agree to pay at the end of your Personal Contract Purchase terms if you want to keep the car.