Personal Contract Purchase (PCP) is a finance product that allows you the opportunity to buy a new or a used car.
It is similar to a Hire Purchase agreement as you will usually pay an initial deposit, followed by monthly instalments over a term typically between 18 to 48 months.
What makes PCP different to Hire Purchase (HP) is that your monthly instalments are paying off the depreciation of the car, and not its entire value, over the course of the term. Then, when you get to the end of your agreement, there is a final, balloon payment that must be made if you want to keep the car. The balloon payment is often referred to also as the Guaranteed Future Value (GFV).
When you have chosen your vehicle, you will then agree your annual mileage and decide on the agreement term with one of our Business Managers.
We will then determine the Guaranteed Minimum Future Value (GMFV) of the vehicle at the end of the agreement and work out a deposit and monthly amount that works for you.
At the end of your agreement you will then have three options:
Return – Simply return the car the back to us
Retain – Keep the car by paying the optional final payment
Renew – Trade it in for another car
For a quotation, help, or advice contact us and ask to speak to one of our Business Managers.
You can normally settle your agreement early by asking the finance company to provide you with a settlement figure. However, the finance company will require you to pay off the difference between what your car is worth, and what you still owe and there may be a difference which is known as negative equity. On the other hand, you may find that at the end of your term your car is worth more than the Guaranteed Future Value, which means you will have some positive equity to contribute towards your next car.
Hire Purchase is a way to finance buying a new or used car. You will normally pay an initial deposit and will pay off the entire value of the car in monthly instalments. When all the payments are made, the Hire Purchase agreement ends, and you own the car outright.
The short answer is yes, you can end your finance early. There are different provisions within each finance agreement that allows you to do just that. If you have got through two-thirds of the way through your finance agreement, the options to end the finance agreement early open up.
For a Hire Purchase agreement, there is an option of paying it off early through a settlement fee. A settlement fee covers the cost of any remaining unpaid instalments and interest payments remaining on the agreement. Once the settlement fee is paid, you take full ownership of the car early.
Under a Personal Contract Purchase agreement, you can also pay a settlement fee for bringing the agreement to an end early. After that, you can choose to hand the car back or you have a second option. Through a PCP agreement, you can take full ownership of the car by paying off the remaining Guaranteed Minimum Future Value also known as a balloon payment.
There are other finance options and products that we supply, which we have outlined below, but if you have any questions at all then do not hesitate to contact the dealership. We will be able to talk you through all your buy and leasing options, whether it’s a brand new or fully approved used car you a looking to for.
Also know as PCH or personal leasing, Personal Contract Hire is becoming a popular alternative among car users and is in essence a long-term rental agreement. You pay agreed monthly rentals over an agreed term (usually 24 to 48 months) and then return the vehicle at the end of the agreement, with no worries around depreciation, selling or disposal.
Once you have decided on your next vehicle, a fixed monthly rental will be calculated by taking the following elements into consideration:
Once this has been calculated and agreed, you will pay an initial upfront rental and then pay a series of fixed monthly payments throughout the agreement. Once the agreement has finished you return the vehicle to the provider, allowing you to lease or purchase another vehicle of your choice. As long as you haven’t exceeded the agreed mileage or caused any excess damage, you will have no further obligations once the contract ends. With PCH you will never own the vehicle or have the option to buy.
With RTI insurance you can fetch the entire amount of loss that you have incurred. RTI cover can also help to protect the purchase price of your vehicle and offer financial protection that you need.
Your car is declared a write-off due to an accident, fire or theft?
Cars depreciate as they age and your insurer will probably only pay out the current market value leaving you seriously out of pocket. This is a scenario faced by many motorists today. The shortfall could be a significant sum depending on the rate of depreciation of your vehicle.Who will protect you against this financial loss?Who will ensure you get back to the amount you originally paid for the car?For peace of mind and the protection, consider the cover RTI can offer.