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Car Finance

Car Finance
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Personal Contract Purchase (PCP)

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.

A PCP might look convenient and affordable, but...

  • Can you afford a substantial final payment?
  • A new car every three years carries a big hidden depreciation cost.
  • You're tied to the manufacturer if you 'roll over' into a new PCP scheme.
  • Go to OWN OR LEASE? for non-ownership finance plans.