Personal Contract Purchase (PCP)

Personal Contract Purchase (PCP) is becoming an increasingly popular finance solution for private individuals who are purchasing a vehicle, it offers the preference of fixed lower monthly repayments with the flexibility to defer a proportion of the payment of the vehicle until the end of the agreement, this is known as your final ‘balloon’ payment.

At the beginning of the agreement you simply choose your initial deposit, the length of term typically between 24–48 months and your expected annual mileage.  

The Guaranteed Minimum Future Value (GMFV) of your vehicle is then calculated based on the information you provide and the total GMFV becomes your final ‘balloon’ payment.

The higher your GMFV the lower your monthly payments and the larger your balloon payment at the end of your agreement if you wish to own your vehicle outright.

The lower your GMFV the higher your monthly payment and the smaller your balloon payment at the end of your agreement if you wish to own your vehicle outright.

The monthly repayments are calculated by deducting your deposit and GMFV from the purchase price of your vehicle, you pay the remaining balance and interest payable over an equal number of monthly repayments throughout the term of your agreement. 

At the end of your PCP agreement you then have a number of options.

Option 1 

Part-exchange your vehicle—use any equity above the Guaranteed Minimum Future Value as an initial deposit on your next purchase.

Option 2 

Keep your vehicle—simply pay the Guaranteed Minimum Future Value to retain ownership.

Option 3 

Refinance the final balloon payment.

Option 4

Return your vehicle and have nothing further to pay, subject to vehicle condition and within the agreed mileage terms. (Subject to terms and conditions)

Why Choose Personal Contract Purchase?

  • Flexible deposit to conserve your personal or business cash flow
  • Low fixed monthly payments to suit your budget
  • Low risk, protection against depreciation as your minimum future value is guaranteed
  • Choice at the end of the agreement to part-exchange, keep or return your vehicle
  • Ideal if you like to drive the newest model with lower payments
  • Offers potential lower monthly payments than traditional forms of funding
  • Monthly repayments do not attract VAT

For further information or to discuss how Chatsbrook can help you please contact us on here.