Car Finance

What is Personal Contract Purchase (PCP)?

One of the most popular types of car financing is Personal Contract Purchase (PCP). PCP plans start with an initial deposit payment. Then, for the fixed term of the agreement, you will pay monthly instalments. The length of the agreement term is typically between 18 and 48 months, depending on your deposit and credit rating. The monthly payments are made against the depreciation of the car, not its entire value so, at the end of your agreement, a final payment must be made if you want to keep the car. This is often referred to as the Guaranteed Future Value (GFV) of the car. You will also be required to estimate your mileage and surcharges may apply if you exceed this estimate. The great thing about this product is that it allows you the opportunity to buy a new or a used car for affordable monthly payments.

How does PCP actually work?

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When you have chosen your vehicle, you will then agree your annual mileage and decide on the agreement term with one of our Business Managers.

We will then determine the Guaranteed Minimum Future Value (GMFV) of the vehicle at the end of the agreement and work out a deposit and monthly amount that works for you.

At the end of your agreement you will then have three options:

Return – Simply return the car the back to us 
Retain – Keep the car by paying the optional final payment
Renew – Trade it in for another car

For a quotation, help, or advice contact your local dealership and ask to speak to one of our Business Managers at your local BMW GForces dealership

What should you consider when applying for a PCP?

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  • Monthly payments on a car financed by PCP are usually lower than if your car is financed by a Hire Purchase agreement.
  • If you decide not to buy the car, you can simply walk away when you've made all the payments.
  • Similar to PCH, you can drive away a new or used car every few years (dependent on the chosen term) without worrying about selling it on.
  • If your car is worth more than the Guaranteed Future Value then you can use that equity towards a deposit on a new car.

What is Hire Purchase (HP)?

Hire Purchase is a very popular way of financing either a new or used car. The agreement starts with an initial deposit payment followed by agreed monthly instalments until the value of the car is paid in full. The length of the term of HP agreements can vary depending on your circumstances, but the advantages are that, at the end of the agreement, you will have full ownership of the car. Your mileage is also irrelevant so you can’t incur any excess mileage charges.

To find out more about the finance options available to you with The Car Sales Company, you can enquire online. Or, get in touch with our friendly and helpful team. They have extensive knowledge of all of the financial products we offer which, combined with our superb offers and special promotions, could see you behind the wheel of your dream car for less than you think.

What are the advantages of HP?

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  • You’ll be able to drive away a car that you may not have managed to buy outright.
  • Unlike a PCP or PCH contract, you won't need to estimate your mileage at the start of your Hire Purchase agreement, so you'll avoid excess mileage charges.
  • Once you’ve made your final monthly payment, including the option to purchase fee, you'll have full ownership of the car.

What should you consider when opting for HP?

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  • Monthly payments may be higher than some other finance options, such as PCP, as you're paying off the full value of the car.
  • You won’t be able to sell the car without settling the finance.
  • You won’t own the car until you have made all of your repayments.
  • You’ll need to keep the car properly insured, maintained and in your possession until the full value is paid off.