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
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
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.