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Comparing Your Car Finance Options Doesn't Have To Be Hard

Beyond the monthly payments, the real cost of a new car often lies hidden in the fine print of finance deals. Our platform is designed to demystify Hire Purchase (HP) and Personal Contract Purchase (PCP) options, allowing you to make a truly informed decision about your car purchase.

Car Outline

Personal Contract Purchase (PCP) For Your Next Car

Personal Contract Purchase (PCP) is a popular way to finance your next car. You typically pay an initial deposit, followed by fixed monthly payments over a set term, usually 2-4 years. A significant portion of the car's value is deferred into a final, larger payment known as the Optional Final Payment, often referred to as a balloon payment. At the end of the agreement, you have three choices: pay the Optional Final Payment and own the car, return the car to the finance company, or use any equity in the car as a deposit for a new PCP agreement. This option is ideal for those who want to drive a newer car more frequently and prefer lower monthly costs.

PCP deals are widely available from dealerships and specialist car finance brokers. While dealerships often promote their own PCP offers, it's advisable to compare these with deals from independent finance providers. Dealer finance can sometimes come with incentives, but you need to weigh these against the interest rate being offered and the effective monthly price you will pay for your PCP deal. Check out comparison sites to see other finance companies that might offer PCP on the vehicle you are interested in.

Advantages of PCP
PCP is particularly beneficial for individuals who prioritise lower monthly payments and enjoy changing their car regularly. The deferred lump sum means your monthly outgoings are significantly reduced, allowing you to afford a higher-specification vehicle than you might with other finance methods. It also offers flexibility at the end of the term, giving you options rather than committing to ownership from the outset.

Disadvantages of PCP
The main disadvantage of PCP is that you don't automatically own the car at the end of the agreement unless you make the large Optional Final Payment. If you don't intend to make this payment, you effectively rent the car for the duration of the agreement. There are also mileage restrictions, and exceeding these can result in excess mileage charges. Additionally, you are responsible for maintaining the car in good condition, as any damage beyond fair wear and tear could incur charges when you return the vehicle.

Loan Details

Personal Contract Purchase (PCP) offers fixed monthly repayments. A larger deposit can reduce this amount, with potential dealership contributions. Note that deposit limits may apply. Additionally, equity from a previous PCP agreement can often be rolled into a new deal as a deposit.

Total Cost Over PCP

Personal Contract Purchase (PCP) offers predictable fixed monthly repayments. While your initial deposit contributes to the vehicle's total cost, PCP provides reassurance through a Guaranteed Future Value (GFV) established upfront. This GFV eliminates uncertainty about depreciation and allows you the option to simply return the vehicle to the dealership at term end without further obligation.

Total Cost At End Of Ownership

Unlike Hire Purchase (HP), PCP does not result in automatic ownership at the end of the term, you instead have a few options. You can return the vehicle to the dealership, concluding the agreement with no further payments. Alternatively, if the car's market value exceeds its Guaranteed Future Value (GFV), you may have equity that can be used as a deposit for a new PCP agreement, enabling regular upgrades. Your final option is to pay the pre-agreed balloon payment to gain outright ownership of the vehicle, which you can then keep or sell.

Cost Per Month (Lifetime)