PCP car finance
Lower monthly payments, with the choice to keep, return or part exchange the car at the end.
What is PCP?
Personal contract purchase (PCP) is a way to spread the cost of a car while keeping your monthly payments lower than they would be on hire purchase. That’s because part of the car’s value is deferred to the end of the agreement as an optional final payment, sometimes called a balloon payment.
The lender sets the optional final payment at the start, based on what it expects the car to be worth at the end of the agreement, the mileage you agree and the length of the term.
How PCP works
- You pay a deposit. This can include the value of a car you part exchange.
- You make fixed monthly payments, usually over two to four years.
- At the end, you choose what happens next.
Your options at the end
- Keep the car. Pay the optional final payment and the car is yours.
- Hand it back. Return the car and walk away, as long as it’s within the agreed mileage and in reasonable condition for its age.
- Part exchange it. If the car is worth more than the optional final payment, you can put the difference towards your next car.
Things to think about
- Mileage. You agree an annual mileage at the start. Going over it means excess mileage charges if you hand the car back, so be realistic.
- Condition. Damage beyond normal wear and tear may be charged for if you return the car.
- Ownership. You don’t own the car until you’ve made the optional final payment.
- Total cost. Lower monthly payments don’t always mean a lower total cost. If you plan to keep the car, compare the total amount payable with hire purchase.
Is PCP right for you?
PCP tends to suit people who like to change car every few years and want predictable, lower monthly payments. If you want to own the car outright at the end without a large final payment, hire purchase may suit you better.
Call us and we’ll talk you through how PCP and HP compare for the car and budget you have in mind.
Representative example
Hire purchase
8.9% APRrepresentative
- Cash price
- £15,000.00
- Deposit
- £1,500.00
- Amount of credit
- £13,500.00
- Duration
- 48 months
- 48 monthly payments of
- £333.11
- Total charge for credit
- £2,489.34
- Total amount payable
- £17,489.34
- Fixed interest rate
- 4.61% p.a.
Representative APR 8.9%. Finance is subject to status and available to UK residents aged 18 and over. We are a credit broker, not a lender.
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Other finance options
Personal
All personal car financeWhat happens at the end of a PCP?
You choose one of three options: pay the optional final payment and keep the car, hand the car back (as long as it's within the agreed mileage and in reasonable condition), or part exchange it and put any equity towards your next car.
Can I part exchange my current car?
Yes. Your current car's value can go towards the deposit on your next one. If there's still finance on it, the settlement figure is taken into account, and we'll explain how that affects your new agreement.
What's the difference between PCP and HP?
With hire purchase (HP) you pay off the full cost of the car in fixed monthly payments and own it at the end. With a personal contract purchase (PCP) part of the cost is deferred to an optional final payment, so monthly payments are usually lower. At the end of a PCP you can pay the final payment and keep the car, hand it back (subject to mileage and condition), or part exchange it.
Can I pay off my finance early?
Yes. You have a legal right to settle a regulated finance agreement early. Ask the lender for a settlement figure. You'll usually pay less interest than you would over the full term.
Can I get finance on a used car?
Yes. Lenders on our panel finance both new and used cars. The age and mileage limits vary by lender, so tell us about the car you have in mind.
Ready to talk about your next car?
Call us now, or leave your number and we’ll call you back.