A Personal Contract Purchase (PCP) is a tripartite agreement similar to Hire Purchase. PCP is one of the most popular forms of vehicle financing because it gives the customer flexibility at the end of the agreement and initially a lower monthly payment compared to alternative products like Hire Purchase. It is available to both private and business customers. PCP is different from Hire Purchase because of its payment profile and structure. The customer’s repayments are determined by the size of the deposit, the predicted mileage and the length of the agreement. (PCP) is a widely used vehicle finance option in the UK, allowing consumers to finance a new or used car with flexibility and often lower monthly payments compared to traditional car loans. A PCP balloon payment is therefore referred to as the Guaranteed Minimum Future Value (GMFV) or ‘optional final payment’ and is based on the value the finance company predicts the vehicle to be at the end of the agreement.
At the end of the agreement the customer has the option to:
Pay the balloon payment and keep the vehicle.
Hand back the vehicle without incurring further costs.
Trade in the vehicle for a replacement.
A Personal Contract Purchase (PCP) is a tripartite agreement similar to Hire Purchase. PCP is one of the most popular forms of vehicle financing because it gives the customer flexibility at the end of the agreement and initially a lower monthly payment compared to alternative products like Hire Purchase. It is available to both private and business customers. PCP is different from Hire Purchase because of its payment profile and structure. The customer’s repayments are determined by the size of the deposit, the predicted mileage and the length of the agreement. (PCP) is a widely used vehicle finance option in the UK, allowing consumers to finance a new or used car with flexibility and often lower monthly payments compared to traditional car loans. A PCP balloon payment is therefore referred to as the Guaranteed Minimum Future Value (GMFV) or ‘optional final payment’ and is based on the value the finance company predicts the vehicle to be at the end of the agreement.
At the end of the agreement the customer has the option to:
Pay the balloon payment and keep the vehicle.
Hand back the vehicle without incurring further costs.
Trade in the vehicle for a replacement.
