Rates from 8.9% APR. Representative Example 12.9% APR. Personal Contract Purchase (PCP) Example: Car price £25,000.00, Term 4 years, Deposit £2,500.00, Total amount of credit £22,500.00, Representative APR 12.9% fixed rate, Monthly payment £394.69, Option to purchase fee £10 payable, Total cost of credit £8,738.50, Total amount payable £33,748.50, Optional final payment £12,688.07, Annual mileage 8,000pa.
Car Finance 247 Limited is a credit broker not a lender.
PCP is a type of car finance loan that gives you options; at the end of your agreement, you can choose to buy the car, give it back, or trade it in for a new one.
Unlike Hire Purchase, your PCP loan doesn’t have to cover the full cost of your car during the term of the loan, therefore your monthly payments will be cheaper than other car finance options. You simply finance the vehicle's depreciation over the agreed finance term and have a guaranteed future value (balloon payment) to pay at the end of the agreement, should you wish to keep the car.
PCP could be a great choice for you if you like to change car regularly, don’t drive a lot of long distances, and want to keep your monthly payments low.
Keep in mind that terms and conditions will apply – you’ll need to agree to a set mileage and not damage the car to avoid paying extra charges.
How much you’ll pay each month will depend on:
PCP car finance stands for personal contract purchase. Other types of car finance available include hire purchase or HP, lease purchase, and personal car loans.
At the end of your PCP agreement, you have options.
You can either choose to give the car back, buy it by paying the one-off balloon payment, or (if you have equity left in the car) trade it in as a deposit in a new PCP car deal – it’s up to you!
“PCP is great because it offers lower monthly payments, flexible end-of-term options, and the ability to drive a new car every few years, making it a popular choice for car buyers”
A PCP balloon payment is the term that’s used to describe the final amount you’ll need to pay to buy the car at the end of your agreement. It’ll be based on the Guaranteed Minimum Future Value (GMFV) of your car, which is set by your lender from the start of your agreement.
If you’re unable to pay the balloon payment in one go, at Car Finance 247, we work with lenders that can offer refinance loans to help break down the cost into manageable monthly repayments. However, spreading the cost of your balloon payment over a longer term will likely result in a higher total cost of credit overall.
It’s as easy as 1, 2, 3…
If you have funds to put down upfront, then you could reduce the amount you need to borrow but no deposit options are available too.
The amount you'll borrow will be based on how much value the lender thinks your car will lose while you have it, not the full cash price of the car.
You'll need to pay the balloon payment if you want to own the car at the end of your PCP loan agreement.
Car finance can help you break down the cost of your car, but personal contract purchase might not work for everyone. Check out some of the advantages and disadvantages of PCP car finance:
Pros:
Cons:
A PCP car deal could work for you if:
Looking for more details? Head over to the guides where we get under the hood of PCP car finance with our complete guide.
Trying to decide between hire purchase and personal contract purchase? Here’s what you need to know.
Both these car finance options can lead to car ownership but with PCP, you have more flexibility. You’ll be effectively hiring the car during the length of your agreement but with HP, when you reach the end of the agreement and pay the ‘Option to Purchase’ fee, the car will be all yours! PCP gives you more options and you will only own the car if you choose to pay the balloon payment, which has been set by your lender. However, it could be more flexible than HP as, if you don’t want to buy the car, you can return it or use any positive equity as a deposit in a new deal.
Hire Purchase loans can come with higher monthly repayments than other forms of finance including personal contract purchase as you borrow the full cost of the car, not just the amount of value it will lose during your loan term. This may make the amount you pay back overall higher too. If you’re looking for cheaper monthly repayments, PCP could be the better choice for you.
Personal contract purchase agreements typically include annual mileage limits, and you’ll have to pay extra if you exceed them. You may also be charged if you damage the car (beyond normal wear and tear). With hire purchase, you are unlikely to have any mileage restrictions so if you tend to drive a lot of long distances, it might be the best option for you.
To be eligible to apply for a PCP loan with CarFinance 247, you must be over 18 and have at least three years’ address history in the UK.
When you apply for car finance, we’ll look to find you an approval in principle from our panel of lenders. This will involve a soft credit check. Some lenders do require borrowers to have a good credit score, and this could increase your chances of securing a PCP loan.
At Car Finance 247, used car finance is all about helping people improve their everyday lives. We understand that building a good credit score isn’t always easy, and we believe that people should not be penalised for past mistakes. Unfortunately, some individuals find themselves trapped in a cycle, hindered by the lack of a vehicle, impeding both their commute to work and their ability to improve their credit score.
Plus, you’ll have a dedicated account manager on hand to help guide you through the process, so there’s nothing to worry about.
Whether it’s sorting out the school run, getting that big boot for the big shop, or a car you’re proud to park outside the office, we’ll work to find you the best deal from our panel of lenders, even if you have bad credit.
A good APR on a PCP deal depends on your individual circumstances, the amount you want to borrow, the car you want to buy, and your credit history. Every application for finance is assessed individually and the APR offered will reflect your unique situation. Not sure how much you want to borrow? Take a look at our car finance calculator to see what you can afford.
At Car Finance 247, we work with lenders that can offer PCP car finance for used cars that will be up to 10 years old with a maximum mileage of 100,000 miles at the end of your agreement.
Deciding whether a personal contract purchase is worth it depends on your individual circumstances. If you don’t travel a lot of long distances, like to change car regularly, and are looking for low monthly repayments, then personal contract purchase might be the right car finance option for you. However, if car ownership is important to you and you don’t want to worry about mileage restrictions then you might find the prospect of a balloon payment at the end of your agreement or paying extra to exceed your mileage limit means a PCP deal wouldn’t be worth it for you.
No, personal contract purchase isn’t a lease, but it does work in a similar way. With a lease or personal contract hire (PCH), you will never own the car and instead you will pay fixed monthly payments throughout the term before returning the car. Leasing is also typically only available on new cars. PCP loans are available for used cars and, unlike a lease, you will have the option to buy the car at the end of the agreement by paying the balloon payment.
There is no set deposit amount required on a personal contract purchase agreement. In fact, at Car Finance 247, we work with lenders that can offer no deposit PCP deals. However, if you do have a lump sum to put down upfront then this can reduce the amount you have to borrow and will mean you have less interest to pay overall.
You could be eligible for personal contract purchase if you’re over 18 and have at least three years’ address history in the UK. At Car Finance 247, we work with lenders that can offer PCP loans to people with a variety of different circumstances. PCP may be available to you even if you’re self-employed, retired, work part-time, serve in the armed forces, or are claiming benefits. You can make an application to find out more.
Yes, at Car Finance 247 we work with lenders that can offer PCP car finance to people who are agency contract workers, self-employed, retired, or working part-time.
