If you are looking to buy a car in the UK and spread the payment over three to five years, then getting finance with Personal Contract Purchase (PCP) is the most popular way forward. Here’s what you need to know about it.?
Now that you are ready to buy that car you always wanted, it’s time to get your head around arranging finance for it. But you get no points for guessing that the most popular process of financing a car in the UK is a personal contract purchase (PCP).
Just to shed light on something that hopefully you already know about, let us share an interesting fact about PCP. All those people who do finance their car with PCP don’t usually go on to buy that particular car!
The installment of payments is spread over three to five years. A personal contract purchase is a contract that gives you the option to even return the car at the end of the contract.
What are some benefits of a Personal Contract Purchase?
1- PCP is like a long-term rental that permits you to continue to use the car till the contract ends.
2- You can consider PCP as a long-term rental to pay for the car, even though at the face of it the whole procedure looks complicated.
3- At the end of the PCP contract, you can return the car.
4- You can even pay the resale value of the car and keep it at the end of the contract.
5- Or, you can use the resale value of the car and buy a new one at the end of the contract.
How Does a PCP Finance Work?
Once you get your car financed with a personal contract purchase, then this agreement lasts for three to five years. There is also the crucial phase where you will need to pass a credit check.
Do you need to pay any deposit? You do need to pay a deposit upfront. And then you also need to understand what is the total amount you have to pay over the entire duration of the PCP. You have the option of ending this contract without buying your chosen car outright.
Another thing to note is that the terms are strict in the agreement. There are limits placed on the number of miles you can cover with your car financed by a personal contract purchase. You also need to stay with the same dealer if you are thinking of using any equity that is left in your car to use as a deposit to go for a new with PCP.
All interest that you are charged in the PCP contract depends on the strength of your credit rating.
You can go ahead and contact your car dealer. Finance your car with a PCP that they are offering and drive around happily into the sunset.
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