Personal Contract Purchase(PCP) Finance is a popular and flexible way of financing a new car.
If you opt for a PCP finance plan, you pay a deposit and monthly instalments just as you would if you took out a loan however, these amounts are often smaller than other methods of finance. This is because the PCP deal requires a final sum or 'balloon payment' to be paid at the end of the agreement before the car becomes yours.
PCP gives a lot of flexibility and it is more like leasing a car but with the option to own at the end.
When setting up a PCP deal the dealership will give you a 'Guaranteed Minimum Future Value' for the car. This is the minimum amount the car will be worth at the end of the agreement. A GMFV protects you should the car unexpectedly drop in value, or if the car is worth more you can use the equity as a deposit for your next PCP deal.
It puts you in the driving seat - purchase the car, part-exchange it or simply return it, the choice is all yours!
Manageable Monthly payments - perfect for budgeting
Guaranteed Value - the lender guarantees a minimum future value for your car
Tax breaks - If you're opting out of a company scheme, your cash alternative isn't subject to company car tax
VAT free - no VAT on payments