How do PCP agreements work?
Firstly you choose the right vehicle for you then you will make three decisions that will affect your monthly repayments
- Your deposit – how much money you want to pay upfront
- Your repayment period – the length of the contract
- Your estimated annual mileage
Once these have been decided your monthly payments can be calculated and GFV fixed.
During your agreement you have the option to settle the finance at any time by repaying the outstanding balance including the GFV.
Then, at the end of your contract you’ll have three options:
- You can give the car back subject to mileage and vehicle condition
- Alternatively, you can keep it as long as the balloon payment has been paid off
Or you can trade your car in and choose a new vehicle.
What is the difference between PCP and PCH?
People often get confused about the difference between PCP and PCH. PCP is a purchase plan, at end of your contract you have the option to buy the car. Whereas PCH is a hire plan and you do not own the car at the end of the agreement. For more information on the differences between PCP and PCH watch our videos here.
How do I arrange a Personal Contract Plan agreement?
Personal Contract Plan agreements can be arranged at your local dealership and will be sent to a finance company who actually provide the money. Finance companies are regulated by the Financial Conduct Authority (FCA) like banks, so your applications will be subject to affordability and credit checks (see our video on Affordability here).