Be the right age
Most lenders require applicants to be at least 18, though some also impose an upper age limit, often restricting finance to those under 79.
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Our partner Motiv works with a wide range of providers, including the big car finance brands, to help you borrow the money you need
PCP example quote
Below is a typical deal for a 4 year old BMW 3 series worth £20,000. The example is for a 48 month PCP deal.
BMW 3 series
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Car Price
£20,000
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Deposit
£4,000
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Representative APR
10.5%
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GMFV/Final Payment*
£8,000
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Monthly Cost
£203
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Total Cost of Credit
£4,952
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Total Amount Payable
£20,952
Motiv is a credit broker, not a lender. The rate you are offered will depend on your individual circumstances. Representative Example based on ‘good credit’: Borrowing £16,000 over 48 months with a representative APR of 10.5% the amount payable would be £203 a month, with a total cost of credit of £4,952 and a total amount payable of £20,952 and an optional final payment of £8,000.
* GMFV is guaranteed minimum future value. This is the value of the car at the point you're due to make your final payment.
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Choose PCP and you'll pay an initial deposit and monthly payments to cover the remaining value of the car, plus interest. At the end of the term, you can buy the car or walk away.
Optional purchase lump sum
At the end of your PCP, you will have the option to keep the car if you pay lump sum. We've estimated this to be taking your total cost to .
Find car finance loanChoose HP and you'll make monthly payments and usually pay a deposit. At the end of the contract term, you'll own the car.
What is PCP car finance?
PCP stands for Personal Contract Purchase and is a type of car finance agreement. PCP works by you having to pay an initial deposit and then making a fixed number of monthly payments to cover the car’s depreciation. When the contract ends you can make a final ‘balloon’ payment to own the car or hand it back to the dealer.
How do PCP deals work?
Select a deal: With plenty of car finance options available from across the market, all you need to do is find the one that best suits you. We’ll send you through to the lender to get your deal started
Make an initial deposit: With PCP, you’ll usually need to pay some of the car’s asking price up front. There might be a minimum of 10%, and a bigger deposit might even mean better rates and deals
Make monthly repayments: You’ll pay back the finance in monthly payments. PCP deals usually last for three to five years – and every payment brings you closer to owning your new car outright
Final payment: At the end of the agreement, you have a choice. You can hand back the keys and walk away, trade it in for a new car on a new PCP, or make one large ‘balloon’ payment to keep the car
Can I get PCP car finance?
If you're considering PCP car finance, you'll generally need to meet the following criteria:
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Prove your income
Lenders will want to see that you have a regular income, but this doesn’t mean you need to be in full-time employment. Payslips or bank statements are commonly accepted, and you may still be eligible if you’re self-employed, a sole trader, a pensioner, or receiving long-term disability benefits.
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Provide ID and proof of address
To confirm your identity, lenders will ask for a passport or driver’s licence, along with a utility bill or other official document as proof of your address.
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Have a suitable credit record
Finance providers will review your credit history and current financial commitments to assess your eligibility. While criteria vary, a good credit history improves your chances of approval.
What are the pros and cons of PCP finance?
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Advantages
Lower monthly payments compared to HP or a personal loan
A new or more expensive car model could fall within your budget
Flexibility to buy the car outright or hand it back at the end
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Disadvantages
You won’t own the car unless you make the large balloon payment
You can usually only have a PCP plan for cars worth £10,000 or more
Finance is secured on the car - it could be repossessed if you miss repayments
What happens if you miss a payment with PCP car finance?
Speak to your lender. If you think you'll miss a payment, contact your lender as soon as possible. They may be able to arrange a temporary solution
Late payment charges. If you miss a payment, the lender will send a reminder and may apply a late fee
Default and repossession risk. Continued non-payment could result in a default notice. If you haven’t paid at least a third of the total amount, the lender can take back the car without a court order
Credit consequences. Missed payments can lower your credit score, making it harder to secure finance in the future
How do I choose the best PCP deal for me?
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Choose the car you want
The fun part is selecting the right make and model for you. Make sure it is practical and meets your needs
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Make sure you can afford it
The deal can be structured in different ways. For example, a larger deposit will reduce your monthly payments
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Check the terms and conditions
Make sure you’re happy with any mileage restrictions or conditions in place on wear and tear
What are the alternatives to PCP car finance?
Hire purchase
With hire purchase, you’ll pay a deposit and then make regular monthly payments. At the end of the term, once all payments are made, you’ll own the car outright.
Leasing – personal contract hire
This option involves putting down a deposit and making fixed monthly payments to lease the car. At the end of the contract, you simply return the car without any option to purchase
Car loan
A personal loan can be used to buy a car. You own the car from the outset, but will have to repay the loan installments
What happens at the end of a PCP deal?
When your PCP deal is over, you have three options:
Own it: You can buy the car by making a final ‘balloon payment’. Once this is done you own the car, and you’re no longer bound to customisation and mileage restrictions.
Trade in: You can use positive equity in your current car to contribute to the deposit on a new vehicle.
Return it: Once your PCP contract is up, you can walk away from the car without having to pay anything.
Can I part exchange my car before the end of the agreement?
It's possible to part exchange your car before the end of the agreement - but you need to contact your current car financing provider and ask for a settlement figure.
Your settlement figure is what you owe, including any interest payment. If you're in positive equity, you can put that towards your new car. If you're in negative equity, you'll need to make up the difference.
Our expert says…
Personal Contract Purchase is an affordable way to drive a new car. It’s flexible too – you can choose the term, while a bigger deposit can mean lower payments and paying less interest. At the end of the deal, you choose whether to make a balloon payment (which could be pretty hefty) to keep the car, or you could decide to hand it back and start all over again with another brand new car.
Emma Lunn Personal finance expert
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Compare PCP deals with our partner Motiv
It’s easy to find the right car finance option for you when you compare with us.
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Tell us about yourself
Simply answer a few quick questions about yourself so we can see what you’re eligible for – it won’t affect your credit score
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Your ideal car
If you’ve already picked a car, you can look up its registration, or just tell us how much you’d like to spend
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Choose your deal
We compare some of the UK’s leading car finance brands to help bring you the right deal for your needs
Learn more about PCP car financing
Can a PCP deal only be used for finance for a brand new car?
No, PCP is a popular way of financing both new and used cars.
Can I pay off my PCP agreement early?
Yes, you can usually settle PCP deals early. If you wish to do this you should contact the finance company (ideally in writing) and ask them to tell you the total amount you must pay to clear the loan in full. This amount is called an ‘early settlement figure’ and once you have this to hand you’ll have 28 days from when they received your request to pay the amount off in full.
Assuming your finance deal is a regulated agreement the lender is required by law to include a rebate for a portion of the interest charges that are yet to be incurred (the exact portion depending on how close to the end of the agreement you are when you choose to settle the balance).
Sometimes a PCP deal may not be a regulated agreement, for example if you’ve bought a very expensive car or a classic car. In this case you may not automatically be given the same flexibility for early settlement. You should ensure you understand this before signing up to such an agreement.
Can you modify a car on a PCP agreement?
If you wish to make any modifications to a car that is currently financed with PCP then you’ll usually need to obtain permission from the finance company. This is because although you may be the registered keeper of the car, the finance company will be the owner until the finance is paid off in full.
Can I cancel a PCP agreement?
If the amount you have borrowed is under £25,000, you can usually cancel within 14 days of the agreement being signed. This period is often called a "cooling off period" and the finance company will provide you with details of the specific process you would need to follow. If you’ve borrowed £25,000 or more, speak to your finance company to understand your options.
If the finance cancellation request is accepted it will need to be repaid in full. This will involve the lender reversing the payment with the car dealership and arranging for the car to be returned to them. However, you should not assume the dealership will automatically be willing to take the car back. If you bought the car on the premises of a car dealership and signed a ‘vehicle order form’ at the location, you may be legally required to pay for the vehicle in full which will require you to have funds available or alternative finance agreed. Also, if you paid an initial cash deposit, this may not be refundable – even if the dealer does take the car back.
Beyond 14 days, your options to cancel the agreement are likely to be more restricted. If your agreement is a ‘regulated agreement’ you’ll usually have a right under UK Law to voluntarily terminate your agreement once you have paid more than 50% of the total amount payable. Check your agreement or speak to your finance company to find out your options.
Do I need to insure my car if it’s on a PCP deal?
In nearly all cases, you will need to insure the car you buy with a PCP agreement yourself - just as if you had paid for that car in cash. Some dealerships may offer insurance as part of their overall deal, but you should never assume this is the case.
The finance company will usually require you to take out a “fully comprehensive” insurance policy. If the car is damaged or written off, this provides the finance company assurance that the loan can be repaid.
What is the difference between PCP and hire purchase?
A key difference between PCP and HP is what happens once you reach the end of the contract period.
With HP you own the car, but with PCP you have the option to make one final ‘balloon’ payment to purchase the vehicle or you can hand it back to the dealership. Our guide on the difference between PCP and HP explains more.
What are the alternatives to PCP car finance?
PCP isn’t the only way to get a new car without buying it outright. Here are some other options:
Car loan: You borrow funds from a lender for your new motor. You pay back the loan in instalments, including interest on the loan. You’ll own the car once the loan has been fully repaid.
Hire purchase: This works by you making a deposit and once the contract is up, you can keep the car.
Leasing – Personal Contract Hire: Pay a deposit and then monthly payments to lease the car. You can’t keep the car once the lease term is over.
Can I get a PCP deal with bad credit?
It’s not impossible to get a PCP deal with bad credit, however it will be harder. PCP is usually available to those with good and excellent credit ratings.
Reviewed on 26 Dec 2025 by
