Looking for a brand new car but wanting lower monthly payments and flexible terms? Then using Personal Contract Purchase (PCP) may be the ideal option for you...
In fact, research from 2015 suggested that a staggering 88% of men and 75% of women surveyed could not explain what a PCP was. The good news is that if you fall into that category, you’re certainly not alone – and we’re here to help!
The PCP (Personal Contract Purchase/ Personal Contract Plan) is the most popular car finance product on the UK market for both new and used cars. Due to manufacture contributions a PCP is more often than not the most attractive deal on offer.
In a traditional hire purchase agreement, you pay off the entire value of the car in equal monthly instalments. A PCP differs in that you have lower monthly instalments that only cover the car’s depreciation, and then a large final payment at the end, often referred to as a balloon payment or guaranteed future value. At the end of the agreement you have 3 options;
Therefore it is important you make note of your last instalment date as you will need to make the decision as to what to do next.
When comparing the same car on PCP against HP, the big difference is that you are paying off a smaller amount of the car. This means;
We hope that you found this blog post useful, should you wish to find out about other types of finance packages available please click here.