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What is PCP Car Finance?

PCP vehicle finance is the most popular finance option for consumers wishing to change their vehicle every 2 to 4 years. You effectively rent a vehicle from a finance company for an agreed period and then decide at the end of the contract term whether to purchase the vehicle or hand it back with no further obligations.

What’s the Difference?

The main difference between HP and PCP vehicle finance is that with PCP, you only pay for the vehicle’s depreciation over the contract term and with HP, you are pay the entire vehicle purchase price over the contract term.
At the beginning of the agreement the lender will calculate a ‘Guaranteed Minimum Future Value’ (GMFV) for your chosen vehicle based on your anticipated annual mileage. This GMFV or balloon amount is then deferred as a final payment made at the end of the agreement.
Deferring the GMFV to the end of the agreement means that your regular monthly payments are lower than those on a comparable HP agreement over the same term. At the end of the PCP agreement, you will have several options:
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Option 1
Purchase the car by paying the final balloon payment.
Option 2
Hand the car back and walk away.
Option 3
Use any equity in the vehicle towards your next car.
Option 4
Refinance the GMFV balloon payment.

Benefits of PCP Car Finance

PCP car finance is a simple, flexible and cost effective way of securing a better car for a lower monthly payment. At the end of the payment term, you can simply exchange, return the car or pay the outstanding balance to own the vehicle outright.
Simple
Convenient straight forward application process
Tailored
Set your deposit, annual mileage, and contract term to suit your budget
Flexible
Choose whether you want to own the car at the end of the agreement
Lower Payments
Reduces monthly costs and only pay the depreciation value
Guaranteed Future Value
Protecting you from market fluctuations
Change Cars
Ability to change your vehicle more often