PCP

A Personal Contract Purchase (PCP) agreement is a way to pay for a car over time. You pay a deposit first, then lower monthly payments. At the end, you can choose to buy the car, give it back, or use any extra value towards another car.

How a PCP Agreement Works

A PCP agreement splits the cost of the car into three main parts:

  1. Deposit: You pay some money at the start, often about 10% of the car’s price.

  2. Monthly payments: You pay a set amount each month, usually for 1 to 4 years. These payments are lower because you are not paying for all of the car’s value.

  3. Final payment: At the start, the lender guesses what the car may be worth at the end. If you want to keep the car, you pay a large final payment.

Your 3 Options at the End of the Contract

When the agreement ends, you usually have three choices:

  • Buy the car: Pay the final amount and the car becomes yours.

  • Give the car back: Return the car to the finance company.

  • Get another car: If the car is worth more than expected, the extra value may help pay for a new deal.

Key Things to Keep in Mind

  • Mileage limits: There is usually a limit on how many miles you can drive each year. If you go over it, you may have to pay extra.

  • Wear and tear: You need to look after the car. If it is damaged when you give it back, you may be charged.

  • Ownership: The car is not yours unless you make the final payment. If you return it, you will not own it.

If you want more help comparing car finance, you can read the MoneyHelper Car Finance Guide or the MoneySavingExpert PCP Page.