What is personal contract purchase?

If you are in the market for a used car then you may have heard the term ‘personal contract purchase’ being used, or sometimes shortened to PCP. In short, it is a type of finance which proves very popular, but here is everything you need to know about it.

PCP is a type of car finance that has grown in popularity over the last few years. It allows car buyers to get their new car quicker, without having to put down a hefty chunk of money.

How it works is that you typically pay a deposit towards the car and pay the remaining balance off over between one and five years, depending on the agreement. The amount is set each month and everything is detailed out before you drive away, but it does give many people the freedom to drive away in their car quicker than they usually would.

As we have said, the balance is set each month and is paid via a standing order which is set up at the start of the agreement. At the end of the term, you will usually have a few different options to choose from.

The first one is usually to hand the car back to the finance company who you took out the agreement with, the second is to use the car as a part exchange on your next finance agreement, and the last is to pay a balloon payment at the end in order for you to own the car.

Finance isn’t right for everyone but it does have a lot of benefits, including affording a newer or a nicer car, the freedom to drive around without tying up thousands into your vehicle and also the peace of mind that your payments are fixed each month.

Whether you want to explore PCP or you would like more information, please get in touch with a member of the team at Noya Motor Group.