Personal Contract Purchase

Personal Contract Purchase (PCP) is the most popular form of motor finance because it gives the customer flexibility at the end of the agreement and a lower monthly payment compared to alternative products like Hire Purchase, or Conditional Sale. The figure is calculated at the start of the contract and your monthly payments are then based on the difference between the price of the car and its GMFV. At the end of the agreement, you’ll have paid off the value lost by the car (depreciation).

Who is the product suitable for?

The product is suitable for customers who would like to have options at the end, and a lower monthly payment.

How does it work?

At the outset of the agreement, we’ll set a guaranteed future value for your car. You pay a deposit and then make monthly repayments based on the outstanding loan balance less the guaranteed future value.

At the end of the monthly repayment period you’ll have three options;

  • Pay the guaranteed future value and the car is yours.

  • Hand back the car with nothing more to pay, subject to mileage and fair wear and tear.

  • Or, as most of our customers do, part exchange the vehicle and use any equity as a deposit on your next car.

What else do I need to know?

  • Typically repayment periods are over 24 or 36 months.

  • The guaranteed future value is based on your repayment period and mileage. This can be set from 6,000 to 30,000 miles per annum.

  • The car can be up to 36 months old at the start of the agreement and must not exceed 60 months at the end of the agreement.

  • A maximum of 40% deposit is allowed and the minimum loan amount is £3,000.

  • As a ‘regulated’ finance agreement, this product is not available to corporate entities, e.g. limited companies.