Personal Contract Purchase (PCP)
PCP is great if your customer wants to change or upgrade their car or motorcycle* at the end of the finance term. With PCP, a deposit of around 10% is usually required, and then the remaining cost of the vehicle, plus interest, is repaid in equal monthly instalments across the term of the agreement which can be between one – five years (12 – 60 months). The finance is also secured against the vehicle.
With PCP, we guarantee the future value of the vehicle at the end of your customer’s agreement based on the agreed annual mileage and maintenance of the vehicle (known as the ‘Guaranteed Minimum Future Value’). PCP agreements are based on estimated annual mileage and any excess mileage and/or damage may incur additional charges. By deferring this amount to the end of the term, your customer could benefit from lower fixed monthly payments compared to our HP and CS products.
Fees can be paid upfront or spread across the agreement term. If they are spread, they are subject to interest, but will make the initial upfront payment lower and must be agreed with the customer, as it will increase the total cost of borrowing.
Customers have three options at the end of the agreement:
- Pay the Guaranteed Minimum Future Value plus the Option to Purchase Fee (OTP) in one lump sum and become the legal owner
- Hand back the vehicle and the keys, pay any charges incurred, and walk away
- Part-exchange it – use any value left in their vehicle to part-exchange it for a new one
*Terms may vary