Personal Contract Purchase (PCP)
PCP is great if you want to change or upgrade your car or motorcycle at the end of the finance term.
Under a PCP agreement we guarantee the minimum the vehicle will be worth at the end of your agreement based on the agreed annual mileage and maintenance of the vehicle. This value is known as the ‘Guaranteed Minimum Future Value’ (GFV) and by deferring this to the end of the term, you will benefit from lower fixed monthly payments compared to Hire Purchase.
A deposit of around 10% is usually required and the term can be 1 - 4 years and no older than 4 years from time of application. The finance is also secured against the vehicle.
At the end of the term you have three options:
- Part-exchange it – use any value left in your vehicle to part-exchange it for a new one
- Buy it – pay off the final payment (Guaranteed Minimum Future Value plus the Option to Purchase Fee (OTP) in one lump sum and become the legal owner
- Hand it back – simply hand back the vehicle and the keys, pay any charges incurred, and walk away
Hire Purchase (HP) / Conditional Sale (CS)
A hire purchase agreement could be an option if you are looking for something simple and straightforward but want regular payments for the entire term.
A deposit of around 10% is usually required but not a must and the term can be 1 - 5 years. The finance is also secured against the vehicle.
With fixed monthly payments, at the end of the term there is no lump sum. Instead, when you come to end of the agreement you will have paid the vehicle in full and will own it outright.