what is pcp car finance

PCP, or Personal Contract Purchase, is a form of car finance that allows you to use a car for an agreed term by making monthly payments. It is a popular way to finance a new car purchase, and it offers lower monthly payments than a personal loan or hire purchase (HP) car finance. With PCP, the price of the car is split into affordable chunks, including a deposit, monthly payments, and an optional final payment. You can drive the car for a set period of time without needing to buy it outright, and you have until the contract ends to decide whether you want to buy the car or not. At the end of the contract, you have three options: return the car, pay the resale value and keep it, or use the resale value towards buying a new car. However, it is important to note that the loan is secured against the car, which means if you fail to keep up with the repayments, you could lose the vehicle. PCP differs from other finance options mainly because your monthly instalments are paying off the depreciation of the car rather than its full value.