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What is a Personal Contact Purchase (PCP) Deal?

Tim Carpenter, Dedicated car finance expert
Written by Tim Carpenter
Edited on

Personal contract purchase – generally shortened to PCP – is another finance option on the market. With PCP agreements, you are able to defer ownership of the vehicle until you reach the end of the contract and, in the meantime, you are effectively leasing or hiring it.

This makes a PCP similar in some ways to hire purchase, although the period of hire is at a typically lower rate, since it is based on the value of the car at the beginning of the contract minus its value at the end (it’s agreed “residual value”).

The PCP you sign represents an agreement to continue paying the monthly payments for the hire of the vehicle. At the end of the contract you may hand back the car to its owners or pay a so-called “balloon” payment representing its agreed residual value in order to own it.

In arranging the finance, we need to assess your credit rating, since that is one of the first steps to be taken by any finance company to whom you make formal application.

Typically, you will need a fairly good credit score in order to be approved for a PCP. If your credit profile isn’t quite perfect, it’d be suggested that a hire purchase agreement may be more suitable for you.

At CarFinance 247, you can buy a car, van, motorbike or caravan via any reputable UK dealership, so the choice really is down to you!

Get a quote No impact on your credit score

Rates from 6.9% APR. Representative APR 27.4%

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Tim Carpenter, Dedicated car finance expert
Tim Carpenter Car Finance Expert
5 Years
Total cost of credit £ XXX.XX
Total repayment £ XX,XX.XX
48 monthly
payments of
£ 245 98

Rates from 6.9% APR: the exact rate you will be offered will be based on your circumstances

Representative example: borrowing £6,500 over 5 years with a representative APR of 27.4%, an annual interest rate of 27.4% (Fixed) and a deposit of £0.00, the amount payable would be £188.74 per month, with a total cost of credit of £4,824.37 and a total amount payable of £11,324.37

Rates may differ as they are dependent on individual circumstances. Subject to status.

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