Personal Contract Purchase (PCP)
Lower Monthly Repayments Than HP
Spread the cost of your vehicle by paying in fixed monthly instalments with terms from three to four years.
This product contains a balloon payment at the end of the finance agreement, which usually makes the monthly instalment amounts lower than a traditional Hire Purchase (HP) agreement. This is great for customers who like to change their vehicle frequently.
When you have paid off the finance agreement, and the final balloon payment or Guaranteed Minimum Future Value (GMFV), the vehicle becomes yours.
Alternatively you can return the vehicle to the dealership, use it as a part exchange against your next vehicle or refinance the balloon payment into a new HP agreement, subject to finance approval.
Pros & Cons
Generally lower monthly repayments than a typical Hire Purchase agreement
Flexible repayment terms to help suit your monthly budget
No minimum or maximum deposit, so you can have more control over the amount of finance required
Fixed interest rates, so you know exactly what you’re paying every month for the length of the term
At the end of the agreement you can purchase the vehicle outright, return the vehicle to the lender, use it as part exchange for your next vehicle or refinance the balloon payment into a new HP agreement, subject to finance approval
You don’t own the vehicle until you’ve made your final payment, including the final balloon payment, which means the vehicle could be repossessed if you do not maintain contractual payments
You cannot sell or give the vehicle away until you have paid all of the repayments under the finance agreement
Excess mileage charges apply, as documented in the finance agreement prior to purchase
If the predicted Guaranteed Minimum Future Value (GMFV) is set very close to the actual value of the vehicle, there will be little equity to roll onto another deal
The vehicle’s future value is based on its condition in comparison to vehicles of the same age and mileage. Any damage that is not down to normal wear and tear will need to be rectified by the customer