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Personal Contract Purchase (PCP) is a finance product allowing purchase of a used car
Similar to a Hire Purchase (HP) agreement, PCP usually begins with an initial deposit, followed by monthly installments over a term of 18 to 48 months.
What sets PCP apart from Hire Purchase (HP) is that your monthly payments are covering the car’s depreciation instead of its full value for the term. At the end of the agreement, you’ll make a final balloon payment—known as the Guaranteed Future Value (GFV)—if you wish to keep the car.
When you have chosen your vehicle, you will then agree your annual mileage and decide on the agreement term with one of our Business Managers.
We will then determine the Guaranteed Minimum Future Value (GMFV) of the vehicle at the end of the agreement and work out a deposit and monthly amount that works for you.
At the end of your agreement you will then have three options:
Return – Simply return the car the back to us
Retain – Keep the car by paying the optional final payment
Renew – Trade it in for another car
For a quotation, help, or advice contact us and ask to speak to one of our Business Managers.
You can normally settle your agreement early by asking the finance company to provide you with a settlement figure. However, the finance company will require you to pay off the difference between what your car is worth, and what you still owe and there may be a difference which is known as negative equity. On the other hand, you may find that at the end of your term, your car is worth more than the Guaranteed Future Value, which means you will have some positive equity to contribute towards your next car.
Hire Purchase is a simple and reliable way to finance your new or used car. You start with an initial deposit and pay off the car’s total value through monthly installments. Once all payments are complete, the agreement ends, and the car is yours to own outright.
Usually, you’ll first need to put down a deposit on the car you want to buy. The rest of the value of the car will then be paid off in installments over a period of 12 to 60 months.
Hire purchase is arranged by the car dealer, but brokers also offer this service. The rates are often very competitive for new cars, but less so for used cars.
The loan is secured against the car. This means you only own the car after you’ve:
The short answer is yes, you can end your finance early. Different provisions within each finance agreement allow you to do just that. If you have got through two-thirds of the way through your finance agreement, the option to end the finance agreement early opens up.
For a Hire Purchase agreement, there is an option of paying it off early through a settlement fee. A settlement fee covers the cost of any remaining unpaid installments and interest payments remaining on the agreement. Once the settlement fee is paid, you take full ownership of the car early.
Under a Personal Contract Purchase agreement, you can also pay a settlement fee for bringing the agreement to an end early. After that, you can choose to hand the car back or you have a second option. Through a PCP agreement, you can take full ownership of the car by paying off the remaining Guaranteed Minimum Future Value also known as a balloon payment.
Shelly Motors Limited is an appointed representative of ITC Compliance Limited which is authorised and regulated by the Financial Conduct Authority (their registration number is 313486) and which is permitted to advise on and arrange general insurance contracts as an intermediary. Shelly Motors Limited is authorised and regulated by the Financial Conduct Authority for consumer credit activity and our registration number is 602700 Permitted activities include acting as a credit broker not a lender. We can introduce you to a limited number of finance providers. We do not charge fees for our Consumer Credit services. We typically receive a payment(s) or other benefits from finance providers should you decide to enter into an agreement with them, typically either a fixed fee or a fixed percentage of the amount you borrow. The payment we receive may vary between finance providers and product types. The payment received does not impact the finance rate offered.
All finance applications are subject to status, terms and conditions apply, UK residents only, 18’s or over, Guarantees may be required.