Personal Contract Purchase

What is Personal Contract Purchase?

Personal Contract Purchase (PCP) is a type of finance agreement designed for private individuals looking to drive a new or used vehicle in a manageable and flexible way.

You pay:

• An initial deposit

• Followed by fixed monthly payments

• With an Optional Final Payment (OFP) – also known as the Guaranteed Future Value (GFV) – at the end of the contract

Monthly payments are not subject to VAT. If you choose to add a maintenance package, VAT applies to that service element only.

Advantages of PCP

• Low upfront payment

• Fixed monthly payments

• Optional Final Payment is agreed upfront (GFV)

• No depreciation risk if you choose to return the vehicle

• Maintenance and servicing can be included

• You may be able to refinance the final balloon payment

• Available for new or used vehicles

• Cost-effective way to drive a newer car

Disadvantages to Consider

• You’ll need to decide at the end whether to return, keep, or sell/trade in the vehicle – while many see this flexibility as a benefit, it does require forward planning

• Fully comprehensive insurance is required throughout the agreement

More Information on Personal Contract Purchase

PCP is ideal for drivers who want flexibility at the end of their contract, rather than committing to ownership from the outset.

At the end of the term, you’ll have three options:

1. Return the vehicle

   • Hand the car back to the funder

   • No further payment, assuming mileage and condition match the agreement

2. Keep the vehicle

   • Pay the Optional Final Payment (OFP)

   • Or explore re-financing the balloon payment through the funder

3. Part exchange the vehicle

   • Trade in or sell the car at a dealership

   • If the car is worth more than the OFP, you can use the equity as a deposit towards a new vehicle

This structure gives you low monthly costs and freedom to decide later whether ownership or renewal is best for you.