Here is your guide to PCP car finance, you will find all the information you need to know when considering Personal Contract Purchase and how it works. PCP was designed originally to be a personal leasing product for private individuals, However, because PCP is now classed as a conditional sale agreement, it offers private individuals protection under the Consumer Credit Act 1974 and the Financial Conduct Authority.
Personal Contract Purchase gives you the flexibility to set your own preferred contract term and mileage per annum at the start of the agreement, then at the end of the contract, you are given three options, either purchase the vehicle outright, part exchange the vehicle with a dealer and any equity going towards the deposit on your next vehicle, or simply hand your vehicle back to the finance company and walk away.
Capital Car Finance offers some of the lowest PCP rates in the country and has done consistently for the past 17 years, Our Representative APR [Annual Percentage Rate] which is the total charge for the loan including interest, is much lower than most UK providers and is currently set at just 9.9% APR for our PCP product.
So, what are the benefits of PCP?
Buying an older car may seem like a safer option – after all, it will be cheaper to purchase, however, one large repair bill can completely wipe out any saving you made on the initial purchase of an older vehicle.
Firstly, you will know exactly where you are financially, with fixed monthly payments that are normally significantly lower than other forms of traditional car finance.
Depreciation is the single biggest cost of owning a motor vehicle, so getting the best deal offsets the cost of buying your next vehicle. The difference between what you pay for the car and what you get when you sell it, is the amount of money you have lost in depreciation.
The aim for many people is to reduce this gap as much as possible – PCP does this by guaranteeing you a future value at the start, so therefore the risk of any negative equity is removed, as the future value of the vehicle is guaranteed.
Some people argue that PCP works out to be more expensive as you pay a lump sum at the end for what is a for a 3-year-old car [assuming it’s a 36-month contract] but you must consider that you have had the car from new [or nearly new]. Obviously as with buying any new car, the expense incurred will depend on how good the deal was at the start.
Unfortunately, although the PCP procedure is the same wherever you go [i.e. deposit, monthly payments, GMFV etc), that doesn’t necessarily mean that you will get the same value for money wherever you go. Capital Car Finance offers some of the most competitive rates in the UK for PCP and even now considers cars up to 5 years old.
PCP isn’t complicated at all. It’s a standard regulated conditional sale, with more flexibility and most of the vehicle in the UK are bought this way now. Its also regulated by the FCA and covered by the Consumer Credit Act 1974 so you know you’ll be safe when you enter into this type of agreement.
Personal Contract Purchase isn’t complicated at all. It’s a standard regulated conditional sale, with more flexibility and most of the vehicle in the UK are bought this way now. Its also regulated by the FCA and covered by the Consumer Credit Act 1974 so you know you’ll be safe when you enter into this type of agreement.
Whether or not you get a good deal comes down to a few different factors…
You need to look at all the aspects when considering both products and it is not necessarily just down to the monthly payment, here are some factors to consider.
Unfortunately, it’s a common known fact that all motor vehicles do depreciate and go down in value, but essentially PCP divides this depreciation into affordable monthly chunks over an agreed period. This can either help you to build a deposit towards your next car or save up enough to settle the final GMFV at the end of the PCP contract, should you decide to purchase the vehicle at the end of the agreement.
Now you’ve got all the facts and hopefully fully understood this product guide to PCP, you’re probably ready to discuss some options with one of our trained advisers, Capital Car Finance have specialised in the PCP car finance market for over 12 years now, so we have the experience and knowledge to advise you on the best way forward, why not give us a call now on 01925 589020 and we can talk through some numbers with you.
Capital Car Finance Ltd are fully authorised and regulated by the Financial Conduct Authority for consumer credit activity (FCA Registration Number 685925) We are a credit broker and not a lender, which means we act independently as an intermediary for a number of different finance providers.
We will receive a commission payment from our finance provider should you decide to enter into an agreement with them, typically this is either a fixed fee or a fixed percentage of the amount you borrow. The payment we receive may vary between different finance providers and product types. However, the payment received does not impact the finance rate offered. Details of the amount of commission we receive will be provided for you prior to completion. All finance applications are subject to status, terms and conditions apply, UK residents only, 18’s or over, Guarantees may be required.
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