What is Personal Contract Purchase (PCP)
Personal contract purchase(PCP) is a car finance in which you can borrow money from a lender to get your dream car. PCP car finance is not only for new cars but it can be borrowed for used cars as well. Note that
How to get a Personal Contract Purchase Car finance?
To get a PCP finance deal from the lender you would need to select a car first. After selecting a car look around for lenders who provide a PCP deal for that particular car. Because most of the lenders don’t provide a PCP deal for every car.
After you choose a lender who offers
guaranteed loans for your car, you would need to make a small deposit. The deposit amount can be 10% of your car’s value or higher than that. Although in most cases it is 10% of the car’s value. If you decide to make a large deposit it would help you to borrow a low amount which you can repay with ease.
You will get to use the car after you make the deposit for the course of your contract term. At the end of the contract, you can either buy the car, exchange it or return it back. We will look into this in depth further in the article. There are many firms in the UK who are give bad credit car finance who are not regulated by the FCA, always check
Financial Services Register before you apply for a loan in the future.
How much can I borrow from a PCP deal?
When it comes to borrowing from a PCP deal, there is not any specific amount that you can borrow. It also is decided on the value of the car you want a loan for and your credit history, income and other loans if any. Mostly the finance company provide a PCP deal from £10,000 to £100,000 depending upon your need.
When you borrow there is an APR with which you have to repay back the loan. It starts at around 4%. The repayment of the personal contract purchase (PCP) can be done between a time duration of 2 to 5 years. For this time period, you have to keep on making monthly repayments with the APR charged till you repay the loan in full.
Note that Car finance like PCP and car logbook loans are two different types of borrowing.
What happens at the end of your PCP contract?
When your Personal Contract Purchase deal is over there are 3 options you can choose –
- Return the car
- Return it for a new one
- Buy the car
If you decide to return your car you won’t be needed to pay any extra charges unless you have exceeded your mileage allowance or if there’s any damage to the car.
Another option is to return it for a new car. You can return your current car back and get a new one with a new PCP deal.
Last option that you have been left with is to buy the car. You can Purchase the car by making a final settlement payment which is also known as a balloon payment. The balloon payment is decided at the beginning of the contract and is basically the amount that is calculated by considering the value of the car at the end of your contract. Once you make this payment you get full ownership of the car.
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