What is PCP Finance? | Personal Contract Purchase

Personal Contract Purchase (PCP) is a flexible type of car finance agreement, which divides the cost of a car into more manageable regular payments. With PCP finance, you can keep your options open, and choose to either become the owner of or return the vehicle at the end of your contract term.

 How Does PCP Finance Work?

Like an HP agreement, a PCP plan consists of an initial deposit and monthly payments, however, with PCP, you will need to agree the length of your finance term and a mileage cap with your dealer. Based on this information, a prediction will be made of how much the vehicle will be worth at the end of your agreement. This figure, minus your deposit, will be used to calculate your monthly payments.

What Happens at the End of a PCP Agreement?

Unlike HP finance, when your PCP agreement ends, you will not automatically become the official owner of the car. Instead, you will be offered a choice. You can either return the vehicle to your dealer, or keep it by making a large final payment.

If, at the end of your PCP contract, you want to upgrade your car and the vehicle you are returning is more than the predicted future value, you can use the equity as a deposit for your next car.

How to Initiate a PCP Car Finance Agreement

To buy a car on a PCP plan, you must first figure out how much you are willing to spend each month. Once you have done the math, you can move onto the fun bit: choosing your car! Hilton Garage’s website features a finance slider, so that you can filter our stock according to your monthly budget, and apply for PCP finance online with us quickly and easily.