What is PCP car finance

What IS PCP Car Finance: A Complete Guide

A Personal Contract Purchase (PCP) loan is a type of car finance product. Not requiring a significant payment, it simplifies the process of buying a new vehicle. If you want to upgrade your car frequently, this option is perfect for you. You can deal with your car however you want when your contract expires because it gives you flexibility. Under your agreement, you will make recurring instalments rather than a substantial upfront payment. Therefore, PCP car financing may be the best option if you want to purchase a new car at a reduced price.

This guide will go over the benefits and drawbacks of PCP financing, as well as how it functions and how it might be the best option for you.

What Is the Process for PCP Car Financing?

You could finance a new car with PCP on a limited budget with this easy-to-understand method of financing. You could learn more about PCP car financing from our staff. This guide should provide you with the basics needed to determine if PCP is right for you.

Buying a new or used car on a personal contract allows you to spread the cost over a longer period. This period typically lasts two or three years, depending on your financial situation and the type of car you want.

Speak to one of our experts about a contract that might be appropriate for your situation. When you are almost ready to sign your contract, you could also discuss any specifics with either our staff or your lender. Make sure to contact us if you’re interested.

Think About the Expenses Involved

A deposit is also necessary for PCP financing, like with HP

car finance, before monthly payments, may start. The final terms of a PCP and a HP finance arrangement differ from one another. The terms of the HP finance agreements and PCP are different. PCP vehicle finance gives customers several options at the end of the contract, in contrast to HP, which results in the customer owning the car outright. You have the choice of keeping the car after making the final “balloon payment” or returning it and obtaining a new car loan through a PCP agreement.

Like most other finance products, most PCP agreements require you to pay interest on the required monthly instalments. The lender determines the monthly payments and forecasts the promised minimum future value (GMFV).

The GMFV is the agreed-upon price of the car at the conclusion of your transaction. This takes care of the car’s depreciation throughout your contract. Additionally, PCP agreements contain mileage restrictions. The mileage cap is intended to make calculating your GMFV for the lender simpler. Before you sign your contract, you and your lender will typically come to an agreement on an acceptable mileage cap. This makes it possible for you to estimate your annual mileage. Watch your car’s mileage because going above the allowed amount could cost you more.

We’ll provide you with the rates when you apply for PCP car financing from us. These rates will vary based on the vehicle models that fall within your price range and the amount of down payment you intend to make. You might then choose which offer best suits your needs before moving on.

Can I Still Secure A PCP Loan With Poor Credit?

Fortunately, even with bad credit, you may still be able to obtain a PCP deal. We work with specialised lenders who may have a different perspective on your situation and provide you with a great deal on the car of your dreams. Before thinking about a car loan plan, we strongly advise you to organise your funds. After exhausting all other options, our team of financial experts may still be able to help.

Factors to Make When Considering PCP Car Finance Offers

Duration of the Agreement

The length of your PCP contract should be considered when determining whether this sort of financing is appropriate for you. A short-term contract might be your best choice if you only need a vehicle for a short period of time. Consider the scenario where, after two years, you decide to move and no longer need the car. By selecting this option, you could prevent paying more than necessary for the duration. If you are not interested in purchasing a new car, looking for a different car finance option may provide you with more advantages. Or, if you don’t intend to make any pricey payments, a PCP arrangement could better fit your budget.

Is It Better To Trade In Or Keep My Vehicle?

Do you have a reason for keeping a vehicle for such a long time? If you think you could be moving soon, it would be a good idea to get a car you could keep right away. Regardless of your circumstances, buying a car is a significant milestone. Our knowledgeable experts could offer you sound guidance based on your individual circumstances.

PCP’s Benefits And Drawbacks

Pros of getting a PCP contract:

  • You might be able to find a brand-new car for a lower cost.
  • Your finance agreement has flexibility towards the end.
  • Because the cost of your vehicle is covered by your PCP finance agreement, you are protected from depreciation.

Cons of getting a PCP contract:

  • If you don’t make the “balloon payment” at the end of your contract, you won’t truly own the car.
  • There will be yearly mileage restrictions. If you go over them, you’ll be charged.
  • You must adhere to maintenance obligations for the duration of your contract, or you will be charged for repairs and maintenance.

There are restrictions associated with a PCP car loan offer, but you’ll be made aware of them before you sign your contract. Our financial experts can go over the specifics of a PCP vehicle loan with you, or your lender could walk you through everything you need to know. For PCP finance customers, the advantages far outweigh the disadvantages. Many customers like PCP car loan options because of its lower cost and flexibility.

Who Gains from Using PCP Car Financing?

If you’d want to drive a new car but can’t afford the entire price, you might want to consider PCP car financing. People who want to spread the cost of a vehicle purchase over several years might also benefit from it. They won’t be able to pay for their brand-new car all at once, which is why.

This is also a smart decision if you don’t want to own the vehicle when your lease is up. Once your agreement expires, you will have more discretion to act as you like.

Can I Finance a Used Car With PCP?

Even though many drivers who utilise this type of vehicle financing purchase brand-new vehicles, PCP agreements make it simple to finance a used car. However, given the nature of PCP packages, it is typically advised that you select a car that is under four years old and has fewer kilometres on it. Used PCP financing offers can differ depending on the lender. It’s always a good idea to examine all of your options before making a decision, even though they could be a more affordable option for you to get the car of your dreams.

To close…

For people who wish to drive a brand-new car but don’t have the funds to do so, PCP car financing is a helpful financial alternative. There are no additional costs if you make your payments on time. At the conclusion of your contract, you are also free to select any vehicle that meets your demands. Get in contact with our enthusiastic professionals right now if you want to buy a new car via PCP car financing!

They could be able to help you find your next car!

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