PCP (Personal Contract Purchase)
Personal Contract Purchase is now one of the most popular methods of vehicle finance as it offers flexibility, low monthly payments and protects against unforeseen depreciation.
First of all, you choose the car that you want, for example a used car costing £10,000. The finance company calculates the Minimum Guaranteed Future Value (MGFV) of the vehicle, let’s say £5000, which is then deducted from the selling price and your payments are based on the difference, plus the cost of funds. This method of finance enables you to finance a newer car for similar payments.
PCP works well for drivers that are covering up to 25000 miles per year. Apart from the benefits of lower monthly payments, you also have choices at the end of the agreement.
What happens at the end of the agreement?
Option 1 - Part Exchange or Sell
At the end of the agreement you can either part exchange your vehicle for a new or used car or sell your car privately, the choice is yours. Whatever your car is worth you simply deduct the Guaranteed Future Value, which you have not yet paid and the difference is yours to keep. Most customers use this amount as the deposit for their next car.
Option 2 – Keep the car
If you have enjoyed every minute of ownership and would like to keep the car you can by simply paying the Guaranteed Future Value to the finance company and the car is yours.
Option 3 – Return
If market conditions change or your circumstances change you can return the vehicle to the finance company at the end of the agreement and simply walk away, subject to mileage and condition. Note: At the start of the PCP agreement you will have agreed the annual mileage allowance. If you exceed the total mileage allowance over the course of the agreement, an excess mileage charge will be payable.
Apart from lower monthly payments, PCP is extremely flexible and can used to fund both new and used vehicles here at Walkers Motor Group.