PCP explained
Personal Contract Purchase usually finances the vehicle differently from HP, leaving an optional final payment at the end of the agreement.
Monthly payments
Your monthly payments cover part of the vehicle’s cost plus the interest and charges set out in your agreement. Because an optional final payment is left until the end, monthly payments are usually lower than HP over a similar term.
Optional final payment
An optional final payment is agreed at the start. At the end of the agreement you can pay it to keep the vehicle, or follow the other options provided under your agreement.
Returning the vehicle
If you return the vehicle at the end of the agreement, annual mileage and condition requirements set out in your agreement may apply, and charges can be made for excess mileage or damage beyond fair wear and tear.
Part exchange
If the vehicle is worth more than the optional final payment, the difference may be usable toward your next car. We can talk this through with you when the time comes.
Annual mileage
You agree an estimated annual mileage at the start. It affects the optional final payment and any excess mileage charges if you return the vehicle, so it’s worth being realistic.
Vehicle condition
Returned vehicles are normally expected to be in good condition, allowing for fair wear and tear. Damage beyond that may result in charges, as set out in your agreement.
Things to consider
PCP suits people who want lower monthly payments and flexibility at the end. If you keep the car long term you may pay more overall than HP. Mileage and condition requirements apply if you return the vehicle.
