Skip to content

Car Finance Calculator

Calculate your loan immediately

What is Personal Contract Purchase (PCP)?

A personal contract purchase deal – or PCP for short – is a car finance package where you essentially make monthly payments over an agreed period of time – typically two or three years. At the end of the period, you can:

  • simply hand the car back and no further finance costs are involved;
  • part-exchange the vehicle for a new PCP deal;
  • opt to buy it outright by making what is often known as a “balloon” payment. This final payment normally equates to the current (depreciated) value of the car.

View our exclusive PCP offers

What are the benefits of PCP?

A personal contract purchase may be suitable for someone who likes to change their vehicle regularly – but who also wants the flexibility of buying the car outright if they decide to keep it.

Because it is quite a flexible plan, it is ideally suited to people who have good credit histories. This type of deal may not be available to motorists with a poor credit history.

Having a car on PCP may be cost-effective if you want to drive a new (or new-ish) car but want to keep your monthly finance payments down. Because, if you decide to keep the vehicle, you make the larger payment at the end, the initial monthly payments are much lower – typically several hundreds of pounds.

As the final balloon payment will typically equate to the vehicle’s value at the end of the period (so, having allowed for depreciation), the final payment will be in thousands of pounds.

One way to think of it is that you are renting the car for a couple of years but have the option to buy it at the end – or move on to something else.

Examples of how PCP works

As an example, for two top of the range cars totting up 10,000 miles a year each, the following costs, as at July 2014, will typically apply ....

For a BMW 318d Sport Saloon (on the road price £28,675.00), the PCP costs are:

  • an initial deposit of £373.00, then £373.76 every month for 48 months;
  • after 48 months, you can hand the car back or make a one-off payment of £9,495.00 to own it outright.

For an Audi A5 Coupe-S line 2.0 TDI 177 PS 6 speed (on the road price £34,675.00), the PCP costs are:

  • an initial deposit of £7,206.86 (so you could part-exchange your existing car to help find the deposit), then £369.00 every month for 35 months;
  • after 35 months, you can hand the vehicle back or make a one-off payment of £14,582.45 to own it outright.

While these two examples vary in terms of the amount of deposit required, and the interest rates charged on the finance, (4.89% and 7.4% respectively) it does give you a feel for how PCP products work.

Some providers, for example, will accept your own car in part-exchange and as part of the initial deposit. Others require very little deposit.

View our exclusive PCP offers

Getting PCP deals

There are many lenders offering competitive rates on this type of finance, with some of the manufacturer’s offering it on both new and used vehicles. So, it is worth looking around to see what is available.

And don’t forget, at the end of the term, if you decide you do want to keep the car, why not arrange your refinance through Carfinance247? We have access to a wide range of lenders, so will do our best to match you to the most cost-effective deal for your circumstances.

As an example, for two top of the range cars totting up 10,000 miles a year each, the following costs, as at July 2014, will typically apply ....

For a BMW 318d Sport Saloon (on the road price £28,675.00), the PCP costs are:

  • an initial deposit of £373.00, then £373.76 every month for 48 months;
  • after 48 months, you can hand the car back or make a one-off payment of £9,495.00 to own it outright.

For an Audi A5 Coupe-S line 2.0 TDI 177 PS 6 speed (on the road price £34,675.00), the PCP costs are:

  • an initial deposit of £7,206.86 (so you could part-exchange your existing car to help find the deposit), then £369.00 every month for 35 months;
  • after 35 months, you can hand the vehicle back or make a one-off payment of £14,582.45 to own it outright.

While these two examples vary in terms of the amount of deposit required, and the interest rates charged on the finance, it does give you a feel for how PCP products work.

Some providers, for example, will accept your own car in part-exchange and as part of the initial deposit. Others require very little deposit.

Back to top