Personal Contract Purchase (PCP) Finance

If you take out PCP finance, you won’t own the car during the agreement – instead, it’ll legally be owned by the finance provider. 

You can own your PCP car outright if you pay the final balloon payment at the end of your finance agreement.

PCP finance might be suitable for you if you’d rather spread the cost of buying a car across a few years, rather than pulling one big lump sum together. 

You will have to pay interest on your agreement, however, and will be subject to mileage and condition limits if you’re planning to hand the vehicle back at the end of the agreement.

The most important difference is PCP finance pays for a portion of the car’s value, with an optional final balloon payment at the end if you want to purchase the car outright. 

HP, on the other hand, sees you finance the vehicle’s total cost over the course of the agreement. That means you’ll legally own the car outright once the agreement comes to an end. 

Yes. Although you might have to pay additional fees to exit the agreement. You’ll also be subject to mileage and condition penalties if you’ve exceeded either limit. 

Your likelihood of being accepted for PCP car finance depends on your credit score and history. 

Finance providers can offer to do a ‘soft’ credit check, which won’t affect your credit score, and will help gauge how likely it is you’ll be accepted. You’ll only face a full credit check when actually submitting your application for finance.

At the end of your PCP agreement, you have three options: 

• Pay the optional final balloon payment to own the car outright 
• Part exchange the car and use any equity remaining towards the cost of your next finance agreement 
• Hand the car back and walk away 

Read our guide explaining what happens at the end of your PCP agreement in more detail and the pros and cons of each option.