Personal Contract Purchase (PCP) is a popular car finance option that allows you to pay monthly instalments that cover the car’s depreciation during the term of the loan. At the end of the loan agreement, you then have three options: return the car, pay a balloon payment to keep the car, or use the car as a part exchange (deposit) on finance for a new car.
• Suitable for those with a Good credit rating.
• Ideal for those with a large deposit.
• Lower monthly payments – you only pay the difference between the purchase price and Guaranteed Future Value.
• Depreciation is covered in the monthly payments.
• Monthly cost is driven by annual mileage.
• Three options at the end of a PCP agreement: return the car to the dealership; pay the balloon payment to own the car (set at the start of the finance agreement); part exchange the car on a new finance agreement.