Personal Contract Purchase
A Personal Contract Purchase (PCP) plan will enable you to purchase your next car with lower monthly repayments. The way this is achieved is by deferring an amount of the total cost of the vehicle to the end of the contract. This amount is known as the Guaranteed Future Value or GFV.
The Guaranteed Future Value plus your deposit is subtracted from the cash price of the vehicle and your monthly payments are based on the balance (plus interest on the balance and the GFV).
By only repaying the difference between the cash price and the optional balloon payment you are only financing the depreciation of the car.
At the end of the contract you have the following 3 options:
Option 1 – You can return the vehicle to the finance company and if you have not exceeded the agreed mileage, you will have nothing more to
Option 2 – You may keep the vehicle and simply pay off or refinance the outstanding Guaranteed Minimum Future Value [GMFV] payment.
Option 3 – You can px your vehicle and if the trade-in value is greater than the GMFV, the difference is yours.