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Personal Contract Purchase (PCP) Explained

Your guide to Personal Contract Purchase (also known as PCP) finance

What is PCP car finance?

A personal contract purchase agreement, also known as PCP, is a car finance product designed to reduce your monthly payments by delaying part of the repayment to the end of the agreement. You can tailor the monthly payments, deposit, annual mileage and final payment to suit your needs.

How PCP finance works

You pay a deposit at the start of the agreement, a fixed monthly payment throughout the agreed term and then at the end of the agreement you have three options:

  • Buy the vehicle (By paying the final balloon payment outlined in the agreement)
  • Return the vehicle
  • OR part-exchange the vehicle against your next car

Benefits of PCP finance

  • Flexible options at the end of the agreement
  • No surprises - monthly payments & interest rate are fixed

Things to consider with PCP finance

  • Mileage charges - you’ll pay a fee (usually pence-per-mile based) if you exceed the amount in your agreement
  • Damage charges - only applicable if you're handing the car back
  • Owning the car - You won't own it until you make the final payment

Frequently Asked Questions about PCP