What is pcp car finance

What is PCP Finance ? Can you finance a car with PCP? How does PCP finance work? It works by spreading the price of a car across a deposit, a series of monthly payments, and an optional final payment. Typically a PCP finance agreement lasts between two and four years.

A personal contract purchase (PCP) is the most popular way of financing a car.

It’s basically a loan to help you buy the car you want. But it differs from a normal personal loan because you don’t have to pay off the full value of the car. The HP you pay a low rate for the specified term then at the end of the term you can buy the car for current market price, which will likely.

The guaranteed minimum future value (GMFV), and the amount remaining to pay, is £7k The theory with this type of finance contract is that the difference between what the car is worth at the end of. Like other types of finance such as leasing or loans, PCP allows drivers to spread the payments for a vehicle over a long period, typically two or three years.

PCP is a bit like hire purchase, but there are some important differences. Customers pay a deposit on the car they want and make monthly repayments until the end of the term. The PCP (personal contract purchase, sometimes called a personal contract plan ) is by far the most popular car finance product on the UK market for both new and used cars.

In this guide, we will explain exactly how a PCP works, why it’s so popular, what the advantages and disadvantages are, and what you should be looking our for.

PCP has turned new-car ownership into a reality for many who previously thought it out of reach. PCP finance is attractive primarily because it makes buying a car more affordable.

There are lots of different ways of buying a new or used car. It’s essentially a combination of leasing a vehicle for personal use, and the more traditional hire purchase method of buying something via regular instalments. But unlike a normal personal loan, you won’t be paying off the full value of the car and you won’t own it at the end of the deal (unless you choose to pay the final balloon payment). Personal contract purchase (PCP) is basically a loan to help you get a car.

Our calculator will help you get to grips with how PCP finance works. Personal Contract Purchase or ‘PCP’ is the most popular form of finance for new car buyers, but it can be tricky to understand.

Simply enter your numbers to get an idea of what your monthly PCP finance payment could look like. They are loans secured against the. Most PCP car finance deals are available for anywhere between and months, although months is pretty typical.

Its Finance Director, Adrian Dally, explained: “The PCP was introduced into the market by For who brought it over from the States more than years ago. But it’s been climbing up the ranks since.

A PCP finance deal is “basically a loan to help you get a car”, says MoneySavingExpert. Unlike conventional loans, where customers pay off the entire value of a car, buyers hand back the vehicle at.

At the start of your PCP contract, a Guaranteed Future Value (GFV) of the car is set. PCP loans provide relatively low monthly repayments and make car finance very affordable.

The car finance is then calculated based on the value of the car now minus the residual value.

Example of PCP Loan - BMW PCP Finance example. Imagine you are looking to take a PCP loan on a new BMW at £3000. PCP is an incredibly popular option for car finance agreements, thanks to its flexibility.

You get to choose the car and decide how long you want the term to be. Under a PCP agreement, you must pay an initial deposit, then a series of monthly repayments.

After these repayments en you can choose whether you want to own the vehicle or not.