The PCP, or Personal Contract Purchase, is currently one of the most popular ways of financing a new car. There are a number of key pieces of information that are important to remember if you are to understand how the deal works.
Typically around 10% of the car's On The Road (OTR) cash price. The larger the deposit, the less you will need to finance and the lower the monthly payments will be - and therefore the less the vehicle will cost in total, as interest is not charged on the deposit. Some deals have a Dealer Deposit Contribution included, which is how much we will contribute towards the price.
This is simply how much you will pay per month, for a set number of months. The monthly payments will of course be lower the larger your deposit is, and as the deposit is not affected by the interest rate it is worth putting in as much as you can afford to lower your monthly payments.
This is also referred to as the 'balloon payment' or 'Guaranteed Future Value (GFV). If you decide you want own the car at the end of your contract term you can pay this sum in full and you will own the car. The GFV is calculated by the finance company and is how much they expect the vehicle to be worth at the end of the contract.
This is how much you will be borrowing and is the easiest to calculate - It is the OTR Cash Price of your vehicle (as seen on the price list) minus the deposit - including the Dealer Deposit Contribution.
This is how much the vehicle would cost to buy it outright and drive it away. This includes the following:
This is the amount of interest that you will pay annually, averaged over the full term of the loan. The lower the APR, the lower the monthly payments will be. These rates are fixed by the finance house and so cannot be changed, however we negotiate on your behalf to get better rates - it is in our interests to get you the best deal possible. Typical rates across the industry are 6-10%
There are a few charges you need to be aware of:
At first glance a PCP deal is fairly daunting to those who don't understand it already and the small-print is often seen as an underhand way to make the offer less attractive, however this is all useful information designed to protect you. Aside from offering the PCP table with the figures in, the small print tells you the following information: