Personal Contract Purchase (PCP)

Keeps the option to purchase open, whilst avoiding the risks of ownership



Personal Contract Purchase (PCP) means paying a fixed monthly fee for the use of a car, over a set period of time, and within an agreed mileage bracket. At the end of the contract you can hand the vehicle back or pay a balloon payment and take full ownership. This means that you avoid all the depreciation risks normally associated with buying a car outright, or via a purchase style agreement such as Hire Purchase (HP), but you still get the option to buy the car at the end of the contract period.

Key benefits:

  • Fixed monthly payments that make it easier to manage your overall motoring costs
  • The option to include an inflation proof maintenance package that evenly spreads the cost of servicing and repairs
  • No depreciation worries, with a vehicle purchase option at the end of the contract

How it works:

A PCP agreement is very similar to a Personal or Business Contract Hire arrangement, in that a fixed monthly payment is calculated based on an agreed contract term and mileage.

The key difference comes at the end of the contract when, rather than simply handing the car back, there’s an option to purchase the vehicle for a pre-agreed amount. However, you can still return the vehicle and walk away if you wish. And, as long as you have kept to the conditions of the contract, there are no penalties to pay.

If keeping your options open is important, but you want to avoid taking the depreciation risks normally associated with buying a vehicle outright, Personal Contract Purchase could be worth considering.

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