A PCP (Personal Contract Purchase) deal is a very easy way to finance a new car. The whole deal can be wrapped up in the showroom, you don't need a big deposit, and the monthly payments look temptingly low.

Not surprisingly, PCPs are often sold on their apparent affordability. Buyers put down a small deposit and then make fixed monthly payments for the life of the contract - typically 36 months. These payments are lower than typical loan or HP repayments on a car of the same price, but you're not actually buying the car. And you won't own it until you've made a final deferred payment, which can be as much as a third of the car's original new price.

At the end of the contract, you have to choose whether to:

• Make the final payment to own the car;
• Simply hand it back - you have really only rented it;
• Take out a new PCP with the same manufacturer.