Skip to content
Did you know your browser is out of date?
To get the best experience when using our website we recommend that you upgrade to the latest version of one of these browsers.

Personal Contract Purchase

Compare PCP finance deals

  • See deals you’re pre-approved for without harming your credit score
  • Get your results within minutes with our partner Motiv
  • Find cheaper rates than at the dealership*

 

*Motiv Finance was cheaper 78% of the time, based on rep APR data in 876 vehicle searches from over 100 dealerships in July 2021. Vehicles were all 2 to 5 years old and mileage up to 50,000. Source: Motiv, July 2021.

What is Personal Contract Purchase (PCP) car finance?


A personal contract purchase agreement or PCP deal is a popular way of financing both new and used cars. More than half of vehicles financed through a dealership in 2020 used a PCP* agreement.

More drivers are choosing PCP plans because they can offer lower monthly payments compared to some other types of finance. This can make newer and expensive cars more affordable.

Monthly payments are lower as they cover just the fall in value of the car over time (the depreciation). At the end of the deal you can either make a big final payment to keep the car or you hand it back to the finance company.

Your car acts as security, which means if you have a problem with repayments they can take it away.

car finance illustration

*Source Finance & Leasing association - https://www.fla.org.uk/research/motor-finance-key-statistics/

car finance illustration

How does PCP work?

 

With a PCP deal you may have to pay an up-front deposit (more common for new cars) then you’ll borrow the rest of the value of the car from the finance company. You’ll pay monthly repayments on this loan.

Your monthly repayments will be affected by the ‘guaranteed minimum future value’ of the car – or GMFV. This is based on how much the vehicle is expected to fall in value during the PCP term, which varies by make and model of the car and your expected mileage. The PCP agreement provider will also look at the interest rate and length or term of the PCP deal to work out your repayments.

At the end of the agreement, you’ll typically have three options: Keep the car, trade it in for a new vehicle or hand back the keys and walk away.

How much does PCP cost?

 

How much the PCP agreement will cost in total will depend on what you decide to do at the end of the deal – keep the car or trade in, for example.

Keep the car

Although PCP deals can work out as a lower cost option on a monthly basis compared to hire purchase or a personal loan, if you want to own the car at the end you will usually have to make a large ‘balloon’ payment to settle the total debt.

Hand back the keys

If you choose to hand the car back you won’t pay the large final payment to own the car. But be aware additional costs could still apply. There could be charges if you’ve gone over your ‘pre-agreed mileage’ or the car is damaged beyond fair wear and tear.

 

 

36 Month Example

Car Price

£15,000

Deposit

£1,000

Representative APR

7.9%

Option to purchase fee

£10

GMFV / Final payment

£6,750

Total payable

£17,438.62

Total cost of credit

£2,438.62

Source: Motiv Finance. Representative 7.9% APR.

Is a PCP deal the best option for you?

When it comes to financing a car purchase – whether new or used – there are a range of options and it can feel a bit overwhelming. As well as PCP agreements you could consider a car loan or hire purchase. But think carefully about your financial situation, how you want to use the car – and for how long – to work out which route is best for you.

document icon

Car loans

If you’re approved for a car loan you’ll get the cash paid straight into your bank account. You’re then free to shop around for the car you want – either privately or through a dealership. Car loans aren’t secured on the vehicle so if you got into difficulties and fell behind on repayments the lender couldn’t repossess your car. But this does mean interest rates are likely to be high, particularly if you don’t have a perfect credit score, so the purchase will be more expensive.

car icon

Hire purchase

With this arrangement the finance company pays the dealership for the car directly. You then make monthly payments under the hire purchase plan. These deals are secured against the vehicle so if you fall behind on repayments the finance company could take it away. But this security means the lender can typically offer lower interest rates – so these products are likely to work out as a cheaper option. This could be valuable if you know you have a less than perfect credit score.  

 

 

Advantages and disadvantages of PCP?

As with any choice of finance there are pros and cons to consider with a PCP deal before you take the plunge:

  • Tick icon

    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
  • cross icon

    Disadvantages:

    • You won’t own the car unless you make the large balloon payment
    • Can usually only have a PCP plan for cars worth £10,000 or more
    • Finance is secured on the car so it could be repossessed if you miss repayments

Can I get a PCP deal with bad credit?


When you take out a PCP deal the finance provider will do a credit check on you to assess your credit history and credit rating. It means that if you have missed debt payments in the past or you’ve got CCJs against you this could affect your ability to get the finance.

However, because PCP finance is secured – this means the car itself acts as security (it can be taken back by the lender if you default on your payments), then you may still be able to get the finance even if you have a poor credit history. 

So, while it could be more difficult, it may be possible to get a PCP deal with bad credit. That said, if you are accepted for a PCP deal, expect the interest rate you're offered to be higher than someone with a flawless credit history.

You can use our free service to find out if you might be eligible for a PCP deal with no impact on your credit score.

Representative 7.9% APR

 

 

person driving car

How to compare Personal Contract Purchase deals

Let us take the strain out of finding a PCP deal. With Motiv’s free service it takes just a few minutes and you can see your results and decide which plan suits your needs.

Clock icon

Tell us about the car

If you’ve already found your ideal car enter the details. If not, you can still use the service to see available offers

search icon

Enter your details

These are required to check your eligibility for offers, but don’t worry there’ll be no impact on your credit score

car purchase icon

See deals and apply online

If a PCP deal matches your needs you can apply online with your chosen finance company

No, PCP is a popular way of financing both new and used cars.

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.

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.

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.

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. 

MoneySuperMarket gives you lots of clever ways to save a lot, by doing very little.

  • Take control of your credit score by checking and improving it for free with Credit Monitor
  • Never overpay again with Energy Monitor, our energy monitoring service
  • Over 50 ways to Get Money Calm

So how do we make our money? In a nutshell, when you use us to buy a product, we get a reward from the company you’re buying from.

But you might have other questions. Do we provide access to all the companies operating in a given market? Do we have commercial relationships or ownership ties that might make us feature one company above another?

We commit to providing you with clear and informative answers on all points such as this, so we have gathered the relevant information on this page.