UK Car Financing via Personal Contract Purchase

Personal Contract Purchase (PCP) is one of the most flexible types of vehicle finance. In short, PCP allows you to buy a new car over a fixed period at an agreed maximum mileage deferring an amount of the loan to the end of the contract. At the end of the PCP contract you can give the car back, trade it in for a new model or buy it for the guaranteed figure.

The individual leases a vehicle for a set period at a fixed monthly charge. The customer is required to makes an initial deposit (usually three months’ rental payments) followed by equal monthly rentals over two, three or four years.

The monthly charge is governed by the initial cost of the vehicle, the mileage covered, the period of the agreement and the estimated value of the vehicle at the end of the contract. Service and maintenance cover can also be included.

PCP is generally an attractive alternative to Hire Purchase and is covered by the protections as set out in the consumer credit act.

At the end of the contract, there is an optional final (balloon) payment which can be paid to buy the vehicle outright, or there is the choice to return the vehicle and walk away with nothing further to pay.

PCP's are ideal choices for employees who can receive a car allowance rather than a company car.