What is Personal Contract Purchase (PCP)?
Personal Contract Purchase is very similar to Personal Contract Hire and available to private individuals, this product gives you the ability to tailor the agreement to your needs and also gives you a guaranteed price, subject to mileage and condition, to purchase at the end, should you wish. It is worth pointing out that this is optional, if you don’t wish to pay the guaranteed future value then you can also just hand it back, subject to the terms, and start again.
Below gives you a good idea of how the rentals are calculated and the benefits and points to consider about this product.
What affects the Monthly Payment?
A number of factors come into play when calculating the monthly payment for you and need to be considered when thinking about which vehicle to lease. Our team here are happy to discuss these in detail, we believe it important you make an informed decision that is right for you.
Vehicle Purchase Price – This is a big factor, the more expensive the vehicle, generally the more you can expect your payment to be, although strong residual values can sometimes buck this trend, resulting in a nice surprise. We source vehicles at the most competitive prices and don’t worry, we only buy from the manufacturers franchised dealers.
Residual Value – The amount the funder believes the vehicle will be worth at the end of the contract term. They decide this based on how old the vehicle will be at the end of the contract term and how many miles will be on the clock at this point, they monitor previous sales of the vehicles and closely and constantly monitor industry data, which gives them a good idea of where to set it. The good news is - If they get it wrong and it sells for less than they had hoped to, it’s not your problem!
Mileage & Contract Length – The more miles you do, the more the value of the vehicle drops, so of course your payment will be higher. Contract Length can have a varying impact, normally the longer you have the vehicle the lower the payment but this is not always the case.
Maintained Contracts - You can choose to include the full maintenance package. This includes; servicing, mechanical repairs, tyre replacement and comprehensive breakdown cover. Ideal if you want a fixed monthly cost and no surprise bills!
The Key Benefits of Personal Purchase (PCP)
- You have a guaranteed future value, subject to mileage and condition should you wish to purchase the vehicle at the end of the contract.
- Fixed Monthly Costs, making budgeting easier, maintenance can be included also.
- Flexibility in contractual terms such as contract length, annual mileage and vehicle choice, allowing for tailor made solutions.
- Option of ownership at the end (optional).
- No disposal risk, the funder will collect the car and dispose of it, if they sell it for less than they’d hoped it is not your problem (subject to the vehicle mileage not being over contractually agreed and not subject to any damage not being over and above “Fair Wear & Tear”).
- Often gives you access to vehicles that may have been out of budget when looking to purchase.
Points to Consider
- Early Termination of the contract can be expensive.
- If you exceed your agreed mileage you will be charged a pence per mile at a rate already agreed in your contract terms.
- You are responsible for insuring the vehicle on a fully comprehensive policy.
- Road fund is usually only included for the first year.
- You must return the vehicle in a well maintained condition, this is always a point of concern for customers, but our funders work to a Fair Wear & Tear guide that shows what is and what isn’t acceptable, please speak to the team should you want a copy before agreeing to the terms.