Guide to PCP Car Finance
Breaking It Down into Small Affordable Amounts
How Are Your Monthly Payments Calculated?
What Is The Guaranteed Minimum Future Value?
Option 1 -
Option 2 -
Option 3 -
PCP Car Finance – The Benefits
What About Depreciation?
IS PCP COMPLICATED ?
PCP isn’t complicated at all. It’s a standard regulated conditional sale, with more flexibility and most of the vehicle in the UK are bought this way now. Its also regulated by the FCA and covered by the Consumer Credit Act 1974 so you know you’ll be safe when you enter into this type of agreement.
WILL I SAVE MONEY OVERALL?
PCP vs HIRE PURCHASE?
Personal Contract Purchase isn’t complicated at all. It’s a standard regulated conditional sale, with more flexibility and most of the vehicle in the UK are bought this way now. Its also regulated by the FCA and covered by the Consumer Credit Act 1974 so you know you’ll be safe when you enter into this type of agreement.
Getting The Best PCP Deal
So how do you make sure you are getting the best deal?
- The obvious one being the price that the dealer is selling the car for at the start [e.g. How much you are paying for the vehicle]
- The amount of your deposit at the start of the agreement.
- The APR – As with any finance deal, a lot can depend on the rate charged, fortunately Capital Car Finance have some of the cheapest rates in the UK.
- The GMFV at the end on the contract.
There are several ways to ensure that you are getting the best deal…
- Do your research and shop around, some dealers will offer better deals on certain types of car, so it pays to be flexible as it gives you more options.
- Sometimes you will find that if there has been an overproduction of certain models, this could mean that it’s very likely you’ll get a better deal on that model as the dealers want to move them on due to there being a lot of them about.
- If you have a particular make or model in mind, it’s worth shopping around to find out who has the best deals, capitalcarfinance.co.uk has relationships with several major UK dealer groups and in most cases can find something very competitive if required.
- Don’t allow yourself to be bullied by the dealer, remember you don’t have to take their finance from them, you can take out your finance from where you like, you just want the best price for the vehicle.
- Don’t assume that because the monthly payments are lower on one car than another, that it is a better deal, remember there are several options to consider, especially with PCP [see above].
- The APR, most of us understand this if you’ve ever bought anything on finance, or borrowed money, you’ll know what a difference the APR can make, so don’t be fobbed off, always ask exactly what the APR is, remember if the dealers don’t tell you, it’s probably because it’s too high!
Is Personal Contract Purchase better than a personal loan?
- One of the most beneficial aspects of PCP is that there is no chance of negative equity, this is because you have an agreed a guaranteed minimum future value of the car at the start of the agreement, which is bound by the consumer credit act so even in the unlikely event of the bottom falling out of the car market, you are
- A personal loan cost has nothing to do with the depreciation of the vehicle as it is secured on you and not the vehicle you are buying. However, if you decide to sell the car part way through the agreement you will still have an outstanding balance remaining on the personal loan to consider and if you do decide to settle a personal loan early, you could also end up paying all interest back as there is no rebate of interest with most providers
- In most cases, a personal loan is secured against you, i.e. secured on your property or business if you have If things were to go wrong and your income changes, you could end up losing more than just your car etc.
- PCP offers the opportunity to hand back your car at the end of the term, and avoid all the hassle of reselling, if the car is valued higher than the agreed GMFV, then you will get what’s left over after settling the GMFV, which you can then use as a deposit on your next vehicle. However, should the car be valued at LESS than the GMFV then you will not have to make up the shortfall.
- PCP offers you the opportunity to have a newer car that you otherwise might not be able to afford. When you come to the end of the contract and you decide that you want to keep it or pass on to a relative sell to or friend. It’s satisfying for them to know the history of the vehicle and the fact that it’s been looked after from day 1.