Personal Contract Purchase (PCP)Suitability explanation
Personal Contract Purchase (PCP) is a fixed term and mileage-based agreement which gives you the option to purchase the vehicle. As the payments reflect the anticipated mileage that the vehicle will be covering, it is important that your agreement reflects your predicted annual mileage. The vehicle will not belong to you until you have made all payments due under the contract. With PCP you will pay an initial payment followed by an agreed number of fixed monthly payments which is followed by an optional final payment know as a GMEV (guaranteed minimum end value). This optional final payment is set at the start of the agreement and is based on anticipated value of the vehicle taking in to account its age and mileage. When you reach this point you have the option to pay the GMEV and obtain ownership of the vehicle or return the vehicle to the finance company.
PCP may not be suitable for you in certain circumstances. For example:
- If you do not know what your predicted mileage will be
- Business type restrictions, e.g. vehicles to be used as Taxis or for Driving Schools
- If you plan to export the vehicle or use abroad for extended periods
- Road fund licence is only included for the first year
Benefits of PCP
- Low initial payment and fixed monthly payments
- If you wish to own or buy the vehicle
- If you need to change your vehicle early (early settlement will incur charges)
- For peace of mind motoring optional maintenance plans are available, for an additional fixed monthly fee
- Option to simply return the vehicle at the end of agreement, removing concerns about disposal values and depreciation or pay the end value and keep the vehicle
- Your contract will be regulated by the Consumer Credit Act 1974
Taking care of the vehicle
- You must ensure the vehicle is comprehensively insured at all times
- You must pay any additional charges that you incur e.g. parking fine, congestion charge on time. If you don’t do this, the charge will be referred to the finance company who take payment from you for this and for an administration charge that they will make
- You must have the vehicle serviced and maintained by a main franchised dealer in accordance with the manufacturer’s requirements. If you include a maintenance package please note the funder may decline to settle any related charges if the total mileage on the agreement is exceeded. If you do not service and maintain the vehicle, the funder will make a charge when the vehicle is returned as this will affect its value
- If at the end of the agreement you return the vehicle to the finance company, they will assess the vehicle condition based on the standards set down in the BVRLA fair wear and tear guide and refurbishment charges may apply
- If you return the vehicle to the finance company at the end of the agreement and have exceeded the total contract mileage, you will be liable to an excess mileage charge. Please refer to your quotation.
- If the vehicle is returned, it must have all of the items that were with it when it was delivered e.g. all keys, locking wheelnuts, otherwise you will be charged for replacing these
Failure to make payments in full and on time may result in the contract being terminated and the vehicle repossessed. Only enter in to an agreement if you are comfortable with the financial commitment and terms.