A Personal Contract Purchase (PCP) is a popular choice for drivers who like to change cars regularly. PCP is a flexible vehicle finance option that allows you drive a car for a set period, typically 24–48 months, while paying fixed monthly instalments.
You pay an upfront cash deposit, usually between 10%-35% of the vehicles price. A higher deposit can reduce your monthly payments and the amount you need to borrow. You can also use equity from a part exchange towards your deposit.
You'll pay an agreed number of fixed monthly payments, usually over 2–4 years. PCP monthly payments are typically lower as they cover the car’s depreciation rather than its full value. This usually makes them more affordable compared to other finance options that repay the total cost of the car.
At the end of the agreement you have the option to pay the final balloon payment to own the car outright. The payment amount is set at the start of the finance agreement and is based on the vehicle's estimated value at the end of the contract. You can also decide to return the car or part-exchange it for a new vehicle.
You only finance part of the vehicle’s value over the term.
Choose to keep, return, or upgrade the car depending on your needs.
If the car is worth more than the balloon payment at term-end, any surplus can go toward your next vehicle.
Monthly instalments are consistent, aiding effective budgeting.
Mileage & Condition - Exceeding agreed mileage or wear beyond fair use can incur fees.
Balloon Dilemma - You’ll need to budget or refinance the lump sum to keep the car.
Interest Costs - Interest applies to the full vehicle value, including the balloon portion.
Complexity of Terms - PCP deals can include admin fees, excess mileage penalties, optional extra packages, and end-of-term conditions. Read all terms carefully.