What is PCP Car Finance: Your Complete Guide

Is it possible that you have been wondering “what is Personal Contract Purchase (PCP)?” It’s a car financing option that makes getting a new car easy without requiring upfront payment. It’s perfect for people who want to upgrade their vehicle more frequently. This is due to the fact that it gives you the freedom to do whatever you want with your car when your contract expires. Instead of making a large upfront payment, your agreement calls for you to make regular payments. Therefore, PCP car financing can be the best choice for you if you desire a new car at a significantly lower cost.

This article will examine the benefits and drawbacks of PCP financing, as well as how it operates and your eligibility for it.

How Does A PCP Car Loan Work?

A new vehicle can be purchased on a tight budget by using PCP car financing, which is often straightforward to understand. Our team could explain how PCP vehicle financing works for you. Hopefully, this guide will give you the foundations to help you decide whether getting a car on PCP finance is best for you!

Personal contract purchase, or PCP, enables you to purchase a new or used car while spreading the expense over a long period of time. Depending on the car you want and your financial situation, this term will normally last two or three years.

A financial lender or one of our experts will be able to discuss a contract that might be suitable for your situation. To find out what you might receive, you should get in touch.

Consider The payments Involved

Customers must make a down payment on a PCP agreement, followed by monthly installments, just like with Hire Purchase (HP) car loans. Customers’ options at the end of the term are different under PCP and HP finance agreements. You have two options: keep the automobile after making a final “balloon payment” or return it and get a new loan for a car under a PCP agreement.

Like the majority of other financial products, the majority of PCP agreements contain interest in the monthly payments you will make. Additionally, the lender forecasts the guaranteed minimum future value to determine the monthly payments (GMFV).

The GMFV is the agreed-upon price of the vehicle at the conclusion of your contract. This accounts for the car’s depreciation during the course of your contract. In addition, PCP agreements have a mileage cap. The mileage cap is intended to assist the lender in calculating your GMFV. Usually, before committing to your contract, you and your lender can come to an understanding of a reasonable mileage cap. This enables you to estimate the number of miles you will likely log annually. Keep an eye on your car’s mileage because driving above the limit could mean additional payments.

We’ll provide you with rates when you apply for PCP auto financing from us. These rates will be based on how much of a deposit you wish to put down and which car models fit within your price range. After that, you could choose which offer best suits your requirements before moving further.

I Have Bad Credit. Can I Still Get A PCP Deal?

Fortunately, even if you have bad credit, you could still secure a PCP arrangement. We cooperate with specialist lenders who could see your situation differently and provide you with a deal on your ideal vehicle. When thinking about a car finance loan, we advise you to take some action to organise your money. In the event that you have exhausted all other options, our team of financial experts may still be able to assist you.

Things To Take Into Account When Considering A PCP Car Finance Deal

The duration of the agreement

Consider the length of your PCP contract when determining whether this sort of financing is appropriate for you. Using a short-term contract may be the ideal option for you if you only need an automobile for a short period of time. For instance, if you want to move after two years and won’t need the automobile any longer. This may be the best option to help you avoid paying more than you have to during the term. If purchasing a new vehicle is not something you are interested in, finding a different auto finance option may have more advantages for you. Or, if you don’t anticipate any high-cost payments, a PCP arrangement may better fit your budget proposal.

Do I Want To Keep Or Trade My Current Car?

Do you have any reasons why you would decide to keep a car for a longer time? You might be moving soon, so it would be preferable to get a car now that you can keep. Regardless of your individual circumstances, purchasing a car might be an important milestone. Depending on your circumstances, our committed professionals could assist you in making the best choice.

The Pros And Cons Of PCP

Pros of getting a PCP contract:

  • It would be more affordable for you to purchase a brand-new vehicle.
  • At the conclusion of your finance arrangement, there is flexibility.
  • Since you are paying for your car’s depreciation through your PCP finance agreement, you are protected from it.

Cons of getting a PCP contract:

  • Unless you make the ” balloon payment” at the conclusion of your contract, you won’t actually own the vehicle outright.
  • There will be established yearly mileage caps. If you go over them, you’ll pay a penalty.
  • Throughout the duration of your contract, you must maintain your car; otherwise, you will be responsible for the cost of repairs and maintenance.

There are restrictions in your PCP vehicle finance agreement, but you will be made aware of them before you sign your contract. Our finance experts can explain the specifics of a PCP car loan, or your lender will run through all you need to know. For many PCP finance customers, the benefits exceed the drawbacks. Most customers are content to obtain a PCP vehicle credit package because of the lower price tag and flexibility.

Who Benefits From PCP Car Finance?

Anyone who wants to drive a new automobile but can’t pay the entire price might consider PCP car financing. Additionally, it works well for those who want to stretch the purchase of a vehicle over several years. This is because they don’t want to pay for their vehicle all in one go.

This is a great choice as well if you don’t want to own the vehicle when your contract is over. At the conclusion of your agreement, you have more control over what you want to do.

Is PCP Car Finance Available For Used Car Financing?

It is possible to finance a used car with PCP offers, even though the majority of drivers who choose this type of car financing purchase brand-new vehicles. However, given the nature of PCP deals, it is typically recommended that you select A vehicle that is less than four years old and has fewer miles on it. Deals on used PCP financing vary according to the lender. They might be a more affordable alternative for you to purchase the vehicle of your dreams, but it’s always a good idea to consider all of your options first.

To Conclude…

For those who wish to drive a new automobile but lack the funds to do so, PCP car financing is a practical lending option. There are no additional fees as long as you make your payments on time, and you are free to use any vehicle that satisfies your needs. Contact our dedicated staff right now if you wish to purchase a brand-new vehicle with PCP.

They might help you with the process of getting your ideal car!