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Personal Contract Purchase (PCP) is a finance product that allows you the opportunity to buy a new or a used car.
It is similar to a Hire Purchase/Conditional Sale agreement as you will usually pay an initial deposit, followed by monthly instalments over a term typically between 18 to 48 months.
What makes PCP different to Hire Purchase (HP) / Conditional Sale (CS) is that your monthly instalments are paying off the depreciation of the car, and not its entire value, over the course of the term. Then, when you get to the end of your agreement, there is a final, balloon payment that must be made if you want to keep the car. The balloon payment is often referred to also as the Guaranteed Future Value (GFV).
When you have chosen your vehicle, you will then agree your annual mileage and decide on the agreement term with one of our Business Managers.
We will then determine the Guaranteed Minimum Future Value (GMFV) of the vehicle at the end of the agreement and work out a deposit and monthly amount that works for you.
At the end of your agreement you will then have three options:
Return – Simply return the car the back to your finance provider - excess mileage and condition charges may apply
Retain – Keep the car by paying the optional final payment
Renew – Trade it in for another car
For a quotation, help, or advice contact us and ask to speak to one of our Business Managers.
The answer is yes, you can end your PCP finance agreement early. You can apply to your finance provider for a settlement figure at any point during your PCP finance agreement. Once the settlement figure has been paid you will have full ownership of your vehicle.
• You won’t be able to sell the car without settling the finance.
• You won’t own the car until you have made all of your repayments.
• You’ll need to keep the car properly insured, maintained and in your possession until the full value is paid off.
The answer is yes, you can end your Conditional Sale finance agreement early. You can apply to your finance provider for a settlement figure at any point during your Conditional Sale finance agreement. Once the settlement figure has been paid you will have full ownership of your vehicle.
Hire Purchase is a way to finance buying a new or used car. You will normally pay an initial deposit and will pay off the entire value of the car in monthly instalments. When all the payments are made, the Hire Purchase agreement ends, and you own the car outright.
The answer is yes, you can end your Hire Purchase agreement early. You can apply to your finance provider for a settlement figure at any point during your Hire Purchase agreement. Once the settlement figure has been paid you will have full ownership of your vehicle.
Conditional Sale (CS) car finance is a way of buying a car through manageable monthly payments. Once the value and interest of the vehicle is paid back over the agreed term, you’ll be the legal owner and keeper.
Unlike other finance types, there is no extra costs or fees at the end of your contract.
• You’ll be the legal owner of your car once the value and interest of the car is fully paid.
• You won’t have to pay any of the extra fees or balloon payments that come with other finance deals.
• There are no mileage restrictions.
Hire Purchase and Conditional Sale are very similar. Both have fixed interest rates, fixed monthly payments and the agreement can be adjusted to suit your needs.
The main difference between HP and CS is that HP finance has a small ‘option to purchase’ fee included in your final payment, while CS has no such payment.
The answer is yes, you can end your Conditional Sale finance agreement early. You can apply to your finance provider for a settlement figure at any point during your Conditional Sale finance agreement. Once the settlement figure has been paid you will have full ownership of your vehicle.
In simple terms, Contract Hire is a method of funding the USE of a vehicle for a set period of time but not the overall ownership (or cost of ownership) of it. It allows you to fund the use of a vehicle for a set period of time based on your usage/anticipated mileage for the agreed period of hire. At the end of the period of hire you may return the vehicle to the Contract Hire/Leasing Company*.
*charges may be incurred if terms and conditions are not followed.
You are renting the vehicle for a fixed period of time and paying a fixed (normally monthly) rental for the use of the vehicle. You are not responsible for the disposal or sale price of the vehicle at the end of the contract. This makes it a very easy and risk-free way to run a vehicle. However*, where the agreed mileage limit has been exceeded, the vehicle has not been maintained or kept in good condition, financial penalties may be applied by the Contract Hire/Leasing Company.
*charges may be incurred if terms and conditions are not followed.
Contract Hire is available to any type of customer whether business or private but because of its structure and form, it is ideally suited to VAT-registered businesses. This is because the VAT that rentals attract can be claimed back (wholly or partially depending on vehicle usage) from HRMC.
A Contract Hire agreement can be settled at any point during the agreement. However, penalties for doing so are often high and will be detailed in the terms of the hire agreement.
