Personal Contract Purchase (PCP)

Personal Contract Purchase (PCP)

What is PCP Car Finance?

Dick Lovett's PCP Car Deals

Personal Contract Purchase – often just referred to as PCP – is a popular and convenient way of paying for the next new or approved used car you buy. PCP finance is an ideal option if you want to change your car between 24 and 48 months, and are happy to pay a regular, fixed amount of money every month.

With PCP car deals, you don’t technically own the vehicle, though you can choose to pay the optional ‘balloon payment’ to own the car at the end of the agreement. A balloon payment might also be referred to as the optional final payment; you can pay this amount in full, or refinance it.

You can find PCP deals available on all the brands represented by Dick Lovett’s dealerships – ask us about offers on models from: Aston MartinBMWBMW MotorradMINIJaguarLand RoverPorsche, and Specialist supercars and sports cars.

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Finance Options

How does PCP Car Finance work?

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PCP is similar to other types of car finance in that it allows you to spread out the cost of buying a vehicle by making monthly payments over the length of an agreed period. This could be 36 or 48 months, or slightly less, at 24 months. 

With PCP finance, you pay an initial amount as a deposit on the car – typically around 10% of the total value – followed by fixed monthly payments. When you take out a PCP deal, you will be given something called a Guaranteed Minimum Future Value (GMFV), which states the minimum price the car will be worth at the end of the agreement – provided it’s in good condition and within the agreed mileage limits. It could potentially be worth more but if it’s worth less, you’re protected by the GMFV.

At the end of the agreement you can choose to own the vehicle by making the optional final payment, also known as the balloon payment. This is based on what the dealership or finance company expects the car to be worth at the end of the PCP term. So, at the very start of the contract, you will know what the purchase price of the car will be in a few years’ time.

Part of the PCP contract will include details of the annual mileage limit on the car. You’ll need to give some thought to the mileage you’ll drive every year, and agree on a limit to meet that – be it 8,000 or higher.

If you surpass your annual mileage allowance, you may be charged an extra cost per mile for doing so.

There are advantages to PCP finance. Because you have already paid a deposit, and there is the potential for a large lump sum final payment at the end of the term, the monthly payments are usually lower than with other types of car finance deals such as Hire Purchase (HP). A PCP deal can also sometimes be available on 0% finance.

However, if you don’t maintain the monthly payments, you will need to return the car, and there are also limits on mileage as well as a requirement to keep the vehicle in good condition. It’s likely that you’ll be charged to repair any damage to the car.

Personal Contract Purchase

Steps for a PCP Agreement

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A PCP agreement with Dick Lovett can be completed in a few simple steps.

1. First, choose the vehicle you wish to buy, selecting from our stock of new or used cars.

2. Decide on the length of your repayment period, choose an annual mileage limit and level of deposit.

You will then be given your monthly payments and a Guaranteed Minimum Future Value, if you choose to buy the car in the future.

3. Finally, just arrange to collect your new vehicle. You can do this by visiting the relevant dealership, contacting us over email, or by telephone. You can find contact details for all our brand locations here.

PCP Agreement

What happens at the end of a PCP Deal?

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At the end of your PCP deal, you have three options.

1. You can buy the car outright, making a final payment – usually called a Balloon Payment, or an optional final payment. It’s likely to be a large sum, so you need to ensure you have the funds available to pay for it. You may also be able to refinance the optional final payment.

2. If you choose not to buy and own it, you can use the value of the car – as detailed in the Guaranteed Minimum Future Value – to put towards a PCP deal for another car as part exchange.

3. The third option is to return the car at the end of the PCP agreement, with no further obligations assuming the car is in good condition and within its mileage limit.

If the car need repairs or you have gone over the mileage limit, you will be required to pay for this upon returning the car to the finance company. Bear in mind this means you will need to look for another car. Explore car finance deals with Dick Lovett here.

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